(PUB) Morningstar FundInvestor

July 2014 Vol. 22 No. 11

FundInvestor Research and recommendatio s for the s riou fund investo

SM

Fund vs. Fund Showdown

cheapness and so have more names in the blend part of the Morningstar Style Box.

Both funds have been risk-averse, particularly debt- averse, and that’s been a great recipe for success. In fact, the funds have been real standouts. Interest- ingly, they have only 11% overlap between the portfo- lios, so they’ve taken different routes to great results. Winner: Artisan International Value returned an annualized 15 . 92% compared with 13 . 11% for Oakmark. Those are two of the best returns over that time period, so shareholders of either fund win. This validates Harris’ strategy and its culture, but it also speaks well about Artisan, which has a tre- mendous record of bringing in new teams. Artisan offers managers quite a lot of autonomy as well as profit-sharing from their piece of the business, and it has succeeded in drawing topnotch talent. Its new funds are certainly better bets than most.

RusselKinnel, Director of FundResearch and Editor

Fund Reports

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If you want to get under a fund manager’s skin, do what I’m about to do: Compare his record to that of his former colleague. Just about anything else you can say will rankle less. I don’t enjoy the angry phone calls, but it’s a valuable exercise. A fund has many moving parts, including strategy, manager, and analysts. Take the manager out but leave the other two in place with a new manager, and you have a great petri dish for testing all three. I’ve collected six examples of funds where a manager or analysts left to do something quite similar to a previous charge. The return figures in the tables are annualized. Let’s take them chronologically. In 2002 , analysts David Samra and Dan O’Keefe left Harris Associates (manager of Oakmark funds) to run a new fund for Artisan. The new fund launched in September 2002 and largely applied that same brand of focused risk-aware value that we’ve long associated with David Herro. One difference be- tween the two funds is that Samra and O’Keefe bought a little more small- and mid-cap fare than Herro did. Even today, the fund has a smaller market cap than Oakmark does. In addition, Samra and O’Keefe place a greater emphasis on stability over Oakmark International OAKIX vs. Artisan International Value ARTIX

Fidelity Low-Priced Stock Fidelity Growth Company Fidelity High Income Fidelity Total Bond

Morningstar Research

8

Raising the Bar on Equity-Income Strategies

The Contrarian

10

Betting on a Rebound in Resource Stocks

Red Flags

11

Watch Out for the Tax Bill on These Funds

Market Overview

12

Leaders & Laggards

13

Return % 10/01/02 to 05/31/14

Morningstar Analyst Rating

Prospectus Net Expense Ratio %

Inception Date

Manager Changes and News

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Fund

15.92

Artisan Int’l Value ARTKX Œ

1.18 9/23/02

Portfolio Matters

16

Avoid These Portfolio Goofs

Oakmark Int’l OAKIX

0.98 9/30/92 13.11

Œ

Tracking Morningstar

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Sentinel Small Company SAGWX vs. Champlain Small Company CIPSX

Analyst Ratings

Income Strategist

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Scott Brayman left Sentinel in 2004 to start his own fund company. Brayman vowed to close his funds quicker than Sentinel, which he thought was too cava- lier on that count. Brayman brought some colleagues with him, and they continued to ply a strategy empha- sizing steady growth and modest levels of debt. As

Tread Carefully With Non- Traditional-Bond Funds

FundInvestor 500

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FundInvestor 500 Spotlight

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Continued on Page 2

Follow Russ on Twitter @RussKinnel