(PUB) Investing 2016

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Lord Abbett Value Opportunities Joins the Morningstar 500 Changes to the 500 | Russel Kinnel

Managers George Davis, James Miles, and Stanley Majcher have been managing the fund since 1997 . Majcher and Davis also have more than $1 million of their own money invested. The Bronze-rated fund has an expense ratio of 1 . 27% . See the facing page for more details. Fidelity Extended Market Upgraded We upgraded Fidelity Extended Market Index FSEMX to Gold from Silver. The Premium shares now charge just 0 . 07% and require a $10 , 000 minimum investment, a fraction of the median mid-cap peer. That also compares favorably with its closest index competitors in terms of price and initial-investment requirements. Vanguard Extended Market Index VEXAX follows a similar index, but its Admiral shares charge 0 . 09% at a $10 , 000 minimum. For those who can't meet that minimum, the fund's Investor shares carry a 0 . 10% expense ratio and require only a $2 , 500 initial investment, which offers an edge over Vanguard's Investor shares at 0 . 22% . K

Westport WPFRX and Westport Select Cap WPSRX are merging into mediocre Hennessy funds, so I am dropping those funds from the Morningstar 500 . In their place I’m adding Hotchkis & Wiley Mid- Cap Value HWMAX and Lord Abbett Value Opportu- nities LVOAX . Although both are load funds, they are available in some big No Transaction Fee networks without the load. Lord Abbett Value Opportunities is a mid-blend fund with a Morningstar Analyst Rating of Bronze. The fund has been one of the top performers in its Morningstar Category since it was launched at the end of 2005 and since managers Tom Maher and Justin Maurer took over in early 2007 . (Maher has been a comanager since inception.) The pair looks for small- and mid- cap stocks that are trading near the low end of histor- ical valuations but are still producing revenue or profit growth. That explains why they end up in the middle of the Morningstar Style Box. Hotchkis & Wiley Mid-Cap Value plies the same deep- value strategy found in other Hotchkis funds. It is a sound strategy, but performance is often feast or famine. In the past decade it had four top-decile returns and four bottom-decile returns. But it has seasoned managers, and this may be the low ebb for deep value. If that’s true, then this would be a good point to buy. Generally, a couple of years of underperformance is a better time to buy than a couple of years of outperformance. The fund charges a 1 . 17% expense ratio and has a total of $2 . 7 billion in assets.

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.

Summary of Changes

Add

Drop

Hotchkis & Wiley Mid-Cap Value

Westport

Lord Abbett Value Opportunities

Westport Select Cap

Rating Change (Upgrade)

From

To

PIMCO High Yield

´ •

Fidelity Extended Market Index

• Œ

Rating Change (Downgrades)

From

To

Fairholme

• ‰

Rating Change (Under Review)

From

To

Fidelity Leveraged Company Stock

´ ˆ

New Ratings

To

Janus Research

‰