(PUB) Morningstar FundInvestor

September 2 014

Morningstar FundInvestor

3

A Few New Funds With Potential From Seasoned Managers

Name

Ticker

Morningstar Category

Prospectus Net Expense Ratio (%)

Minimum Investment ($)

The Scoop

American Funds Dvlpg Wld Gr&Inc

DWGAX

Div. Emerging Mkts

1.39

250

American brings dividend focus to emerging markets.

Vanguard Global Min Vol

VMNVX

World Stock

0.20

50,000

Vanguard buys less- volatile stocks and hedges currency risk. Artisan hired Bryan Krug from Waddell & Reed to run this. Similar to Fayez Sarofim- run Dreyfus Appreciation. Meade and Schaub formerly of Janus Venture and Triton run this one. Gibson Smith has done a great job at other Janus bond funds.

Artisan High Income

ARTFX

High-Yield Bond

1.25

2,500

Sarofim Equity

SRFMX

Large Growth

0.71

2,500

Meridian Small Cap Growth

MISGX

Small Growth

1.35

99,999

Janus Unconstrained Bond

JUCTX

Nontraditional Bond

1.07

2,500

practice. I think all fundholders should be given a fair deal. If it’s worth launching, then the fund company can eat some costs for a while. Typically, they eat only a small amount of the costs but leave the actual price paid by investors well above average. You wouldn’t open a restaurant that charges double if the restaurant is only half full. Not everyone does this, though. Vanguard, Dodge & Cox, Fidelity, and Amer- ican Funds generally offer funds that are fair deals from the start. Finally, new funds are more likely to have less-experi- enced managers. Fund managers have to learn some- where, and it’s often at new funds. and five years than the general fund world, but I wouldn’t avoid all of them. You just have to know the limitations and tune out all the marketing dross around a new fund. Instead, look for seasoned man- agers and decent expenses. Ideally you want low costs; failing that, at least insist on middling costs and a manager track record at other funds where fees came down quickly with asset growth. Should You Avoid New Funds? New funds perform a little worse over their first three

There may not be many keepers among new funds, but if you pay close attention, you’ll see some that are. If a manager of a fund with a Morningstar Analyst Rating of Gold or Silver launches a new fund, then by all means dig deeper. If the fund has low costs, you have much better chances of success. And if a new fund employs a strategy where small assets are an advantage, then that vaunted flexibility may actually be an advantage. Funds that trade less-liquid securities like small caps or high-yield bonds come to mind. œ