(PUB) Morningstar FundInvestor

9

Morningstar FundInvestor

June 2 013

very different reasons. Those rolling returns over the past decade land in the category’s top or bottom quartiles 85% of the time, but take those with a grain of salt. Over that stretch, the fund landed in the mid-value, large-value, and (since 2009 ) world-stock categories, yet both traits are to be expected given management’s approach. The fund’s deep-value DNA and focus on capital preservation mean its perform- ance may lag quite a bit and for long stretches in up markets, testing investors’ patience. Yet we’d expect the fund to make up relative ground by losing less money when the market sours. Its 23 . 4% loss in 2008 was much lighter than the MSCI World’s 41 . 9% swoon, and the fund also fared rela- tively well in late 2011 ’s downturn. A single year of extreme outperformance or underperformance can skew a fund’s rolling returns, but virtually all of this fund’s top-quartile three- and five-year rolling returns stem from its relatively strong showings in 2008 and 2011 . That, coupled with the fund’s Low Morning- star Risk rating, suggests this fund is most suitable for investors seeking strong downside protection, but only those able to look past years of weak relative returns when things aren’t as dire. Let Some Funds Roll on By Each of the funds above is a standout, but rolling returns can also raise a red flag. For instance, those for CGM Focus CGMFX land in the large-blend category’s top quartile 66% of the time and in the bottom quartile 29% of the time. That may seem like a good trade-off at first glance, but those bottom- quartile periods have been particularly painful, including a 48 . 2% loss in 2008 and a 26 . 3% loss in 2011 . Continuing on the 1 -star theme, rolling returns for Brandywine BRWIX fall in the mid-growth cate- gory’s bottom quartile 42% of the time, reflecting that fund’s continuing challenges and raising the con- cern that management’s stock-picking doesn’t have the same edge it might have had 10 – 15 years ago. Rolling returns are no silver bullet, but they can be a powerful diagnostic tool, especially if used in combination with other performance measures. œ Contact Michael Herbst at michael.herbst@morningstar.com.

Rolling-Returns Data as of April 30, 2013.

Total Ret Ann.10 Yr USD

Total Ret % Rank Cat10Yr

Morningstar Risk Rating 10 Year

Morning- star Rating Overall

Fund Name

Oakmark Global OAKGX

10.9

14 Average

QQQQ

36-Month Rolling Periods 120 Observations, 10 Years

MFS Global Eqty MWEFX

10.3

27 Below Avg QQQQ

Oppenheimer Glbl Opp OPGIX

11.9

3 High

QQQ

The shading and percentages correspond to how often the fund’s returns landed in each category quartile.

Tweedy, Browne Val TWEBX

7.3

74 Low

QQQQ

CGM Focus CGMFX

10.9

1 High

Q

Brandywine BRWIX

4.6

99 Average

Q

Data as of May 30, 2013.

Rolling-Returns Summary

Oakmark Global OAKGX

MFS Global Equity MWEFX

Oppenheimer Global Opp OPGIX

1 2 3 4

45% 48%

1 2 3 4

40% 44% 16% 0%

1 2 3 4

58% 20% 10% 12%

Quartile Quartile

6% 2%

Tweedy, Browne Value TWEBX

CGM Focus CGMFX

Brandywine BRWIX

33% 8% 8% 52%

66% 4% 1% 29%

15% 30% 13% 42%

1 2 3 4

1 2 3 4

1 2 3 4

three- and five-year rolling returns over that stretch didn’t once land in the category’s bottom quartile.

Roll With the Punches Sometimes interpreting rolling returns isn’t as straight- forward. Investors might see the three-year rolling returns for Oppenheimer Global Opportunities OPGIX topping the category 58% of the time and hop on board. Yet they shouldn’t overlook the 12% of the time it has landed in the category’s bottom quartile, which reflects its High Morningstar Risk. That volatile profile stems from manager Frank Jennings’ penchant for small-cap stocks, heady growers, concentrated sector bets, and top position sizes that at times have bumped up against 10% of assets. Apparently he’s toning down his approach a notch, but it’s too soon to tell whether the fund’s rolling returns will land more consistently in the middle of the pack.

The three-year rolling returns for Tweedy, Browne Value TWEBX also look a little extreme, though for