(PUB) Investing 2016

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Andrew Foster Returns to the Morningstar 500 Changes to the 500 | Russel Kinnel

Neutral-rated fund had $110 million in outflows in 2015 , which shrunk it down to $140 million in total. Comanager Chris Olson stepped down in January 2016 , and Stephen Kusmierczak was elevated to a comanager. Andreas Waldburg-Wolfegg remains as comanager, though he has only been on board since May 2015 . Thus, with new management and redemptions, the fund has limited appeal. I’m adding Seafarer Overseas Growth and Income to take its place. It is an emerging-markets fund run by Andrew Foster, who did an excellent job at Matthews Asia Dividend MAPIX and Matthews Asian Growth and Income MACSX . Interestingly, though, this fund invests in all emerging markets rather than focusing on Asia like his previous charges. The fund has 58% in Asia, 23% in Latin America, 14% in emerging Europe, and 5% in South Africa. He actually has a bit less in Asia than most emerging-markets managers. Foster has more than $1 million invested in the fund. We will be assigning a Morningstar Analyst Rating to the fund soon, but it does have a 5 -star Morningstar Rating. Launched in February 2012 , it is running well ahead of its peers. The fund charges 1 . 30% , and it looks like that will be coming down as assets have grown to $760 million. The fund is available in most No Transaction Fee supermarkets. K

I am dropping Aston/Tamro Small Cap ATASX and Columbia Acorn International Select LAFAX . In their place, I’m adding Seafarer Overseas Growth and Income SFGIX and MFS Growth MFEGX . Aston/Tamro Small Cap is going to be merged into another fund because subadvisor Tamro is folding up its tent. Tamro has been hit with redemptions in mutual funds and other accounts to the point where it is shutting down the firm. The fund itself has shrunk to $150 million from $800 million in the course of a year because of a performance slump. As a result, the fund will merge with AMG GW&K Small Cap Growth GWGIX in a few months, but GW& K Investment Management started running the fund as of Feb. 1 . The complete shutdown of the fund is pretty remark- able, but it shows how active managers are more vulnerable than ever to a performance slump. It has a Morningstar Analyst Rating of Neutral. In its place, I’m adding the steady MFS Growth. It is a $12 billion large-growth fund run by Eric Fischman. Fischman has been on board since 2002 , and he’s produced solid returns. In particular, I am impressed by how the fund has outperformed in most up markets and down markets. Fischman seeks companies with strong pricing power and the ability to grow over the long haul. That means names like Visa V, Amazon.com AMZN , and Master- Card MA . Fischman invests more than $1 million of his own money in the fund. This is a broker-sold fund. See the facing page for more. I’m dropping coverage of Columbia Acorn Interna- tional Select, which has also been shrunk by redemptions, though in less-dramatic fashion. The

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

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Drop

MFS Growth ASTON/TAMRO Small Cap Seafarer Overseas Growth and Income Columbia Acorn Intl Select

Rating Change (Downgrades)

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Janus Balanced

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Janus Flexible Bond

Janus High-Yield

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New Ratings

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Vanguard US Value

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