(PUB) Investing 2016

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Funds From Loomis Sayles and Parnassus Join the 500 Changes to the 500 | Russel Kinnel

To make room, I’m taking out Kalmar Growth-with- Value Small Cap KGSCX . Although it has some appeal, its asset base is shrinking rapidly, as I detailed in the cover story. The fund will need to improve to turn around that trend and continue in business. I’m also dropping Oppenheimer Global Opportunities OPGIX . We give the fund a Morningstar Analyst Rating of Neutral because it’s the definition of key-man risk. Although manager Frank Jennings is in his late 60 s, he has no analyst support and no clear suc- cessor on the fund. He’s a fine manager, but it’s tough to make the case for the fund at this point. K

Two very different funds are joining the Morningstar 500 .

What is Morningstar FundInvestor 500 ? The Morningstar FundInvestor 500 features the industry’s best and most notable funds. Use the list to get new in- vestment ideas and track the funds you already own. FundInvestor subscribers have access to one-page monthly reports on all 500 funds on mfi.morningstar.com. Just type in the name or ticker of the fund in the search box.

Loomis Sayles Global Equity and Income LGMAX is a wide-ranging fund in the world-allocation Morningstar Category. The bond side is run by Dan Fuss and David Rolley, while Eileen Riley and Lee Rosenbaum run the stock side. The four deter- mine the allocation mix based on where they are finding attractive investments. The fund has consis- tently held more in stocks than bonds, and it currently has a 70 / 30 mix. Compared with most world- allocation funds, this fund has a clear lean toward high-yield and growth stocks. That’s been nicely in sync with the market lately, leading to solid returns. The fund is available in No Transaction Fee super- markets despite the official front load. See facing page for more details. I’m also adding large-growth category fund Parnassus PARNX . The 4 -star fund has a nice low expense ratio of 0 . 84% . That’s not bad for a fund under $1 billion. The fund follows environmental, social, and gover- nance principles by screening out less ethical compa- nies and leaning in favor of those that are ethical. Lead manager Jerome Dodson is assisted by relatively new additions Ian Sexsmith and Robert Klaber. The fund skews toward the smaller, more-value end of large growth because it is more value-conscious. The managers like growth, but they emphasize buying names at significant discounts to their intrinsic value estimate. They often add to positions when a stock is falling and trim when it approaches their estimate of intrinsic value. The fund’s ESG criteria give it a clear skew toward technology and away from energy and utilities.

Summary of Changes

Add Drop Loomis Sayles Global Equity & Inc Kalmar Grwth-with-Value Sm Cap Parnassus Oppenheimer Global Opportunities

Downgrades

From

To

MFS Global Equity

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Metropolitan West High Yield Bond

Rating Change DoubleLine Total Return Bond

Not Ratable

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New Rating Loomis Sayles Global Equity and Income

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Matthews India Investor

Parnassus