(PUB) Investing 2016

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Load Funds Get More Accessible The Contrarian | Russel Kinnel

Hotchkis & Wiley This deep-value firm is better than some of its funds’ records look right now. Its equity funds employ a disci- plined deep-value approach that can be rewarding but is currently at a low ebb. The brutal decline in natural-resources stocks hurt the firm’s deep-value strategies in 2014 and 2015 , though they have recov- ered a bit. Columbia Columbia is the aggregation of a number of fund companies. Many of the firms under the Columbia umbrella were acquired in Bank of America’s acquisi- tion spree before the firm was sold to Ameriprise, which then merged it with its own RiverSource group. We give its funds five Neutral ratings and five Medalist ratings—that’s nothing to write home about. But still, there are some good ones, like Silver-rated Columbia Dividend Income GSFTX run by Scott Davis and team. Western Asset This firm is a well-regarded bond specialist. Funds like Western Asset Core Plus Bond WAPAX are definitely worth a look. However, their appeal is reduced by the fact that the load-waived A shares available through NTF plans are much pricier than their institutional shares, and expenses are particularly critical for fixed- income funds. Thornburg These funds aren’t what they once were. Asset bloat and manager defections hurt their records and have led to lower ratings. Thornburg International Value TGVAX is all the way down to Neutral. However, Thornburg Investment Income Builder TIBAX merits a Bronze rating. Morgan Stanley The firm sold most of its asset-management business to Invesco but retained Dennis Lynch’s growth team, which earned the Morningstar Domestic-Stock Fund Manager of the Year accolade in 2013 .We give the bold Morgan Stanley Institutional Growth MSEGX a Silver rating. It’s a focused fund with a fondness for social-media stocks like Facebook FB and Twitter TWTR , so be prepared for a lot of volatility if you buy this one. K

Here come the load funds! More load funds are popping up in No Transaction Fee supermarkets—minus the loads. J.P. Morgan, Hotchkis & Wiley, Calamos, Morgan Stanley, Allianz, Columbia, Oppenheimer, ClearBridge, Western Asset, and Thornburg are all in NTF plans now. They carry the standard minimum investment and are generally load-waived A shares. There are a few big exceptions, though. Fund giants American, MFS , and Franklin Templeton have not joined the NTF trend, possibly because they are such staples of the brokerage world. In any case, this change opens up a lot more opportu- nities for no-load investors. Let’s take a look at a few of the firms. Some of their funds were already in the M 500 , and two new additions are noted on Page 22 . J.P. Morgan J.P. Morgan offers a number of straightforward, well- run funds. They are generally designed to be core holdings that work just as you’d expect them to. The firm eschews extremes in risk to go right down the center. We give Morningstar Medalist ratings to equity, bond, foreign-equity, and target-date funds from the firm, including JPMorgan Value Advantage JVAAX , which has a Morningstar Analyst Rating of Silver in the large-value Morningstar Category. We do give Neutral ratings to a suite of JPM organ Investor allocation funds, in part because of a change in management. Oppenheimer Tread carefully with this firm. It has some strong foreign-equity funds, such as Oppenheimer Developing Markets ODMAX , which we rate Silver. But its bond funds took on big risks that burned fundholders both in taxable and municipal bonds. Its domestic- equity funds are middling and have a mix of Neutral and Bronze ratings.

Our Contrarian Approach I go against the grain to find overlooked funds that may be ready to rally.