(PUB) Morningstar FundInvestor
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Morningstar FundInvestor
June 2 013
Aston Fund Posts Big One-Year Return Leaders & Laggards | Kailin Liu
Laggards Royce Micro-Cap RYOTX
This fund has suffered bottom-decile returns for the past year due in large part to a sizable weighting in basic materials. Universal Stainless & Alloy Pro- ducts USAP , for example, has lost 15% even as the market has rallied nicely the past year. The materials bet is one that a few Royce funds have made, and it has hurt performance at each of them. It means this fund has a lot of exposure to global economic growth. Although the U.S. economy has improved in 2013 , China has been disappointing, and that’s what matters most in commodities. However, the fund still has modestly outperformed peers and benchmark alike since Jennifer Taylor became comanager in 2004 . PIMCO Inflation Response MultiAsset PIRMX This conservative-allocation fund eked out a 1 . 70% gain in the trailing one-year period, worse than 95% of all conservative-allocation funds. Manager Mihir Worah and his team run a distinctive strategy for real return and inflation protection by investing in U.S. Treasury Inflation-Protected Securities, commodities, emerging-markets currencies, REIT s, and gold—a far cry from the large-cap stocks, Treasuries, and corpo- rate bonds that are frequently found in conservative- allocation portfolios. The fund’s asset-class break- down—especially its low weighting in stocks relative to category peers—means that it will not perform similarly to most conservative-allocation funds and will likely lag when stocks rally. Century Small Cap Select CSMVX This fund posted a 18 . 88% gain in the trailing one- year period but still landed in its category’s bottom decile. Manager Lanny Thorndike uses fundamen- tal research to find which quality-oriented companies to buy. He splits the portfolio between “core,” “emerging,” and “opportunistic” for market-leading, wide-moat companies, companies with more rapid growth potential, and turnaround plays. Thorn- dike’s quality bias can mean that the fund lags in up markets. In the past 12 months, picks in a few sectors—including consumer cyclical, technology, and industrials—have lagged. œ
Leaders Vanguard High-Yield Tax-Exempt VWAHX This intermediate-term muni-bond fund gained 4 . 70% over the trailing one-year period, better than more than 95% of its category. Its portfolio takes more credit risk than its typical peer because manager Mat Kiselak invests in lower-quality bonds to gain income. As of March 31 , 2013 , it held 14% in BBB rated securi- ties, compared with a 5% stake for the typical inter- mediate-term muni fund. Its bolder profile can lead to more volatility than its typical peer would sustain, but its stake in credit helped it to shine as low-grade credits bounced back in 2012 . CGM Focus CGMFX This fund gained 37 . 24% over the past 12 months, landing comfortably in the top decile of its peer group for the period. Manager Ken Heebner runs one of the category’s boldest strategies. He typically owns around 20 stocks, trades rapidly (turnover has been as high as 500% ), and aggressively incorporates macro themes into the portfolio. He occasionally shorts securities, such as his huge Treasury short in 2012 and 2013 . The Treasury short benefited it as Treasury prices fell from mid- 2012 through mid-March 2013 . Aston/Fairpointe Mid Cap CHTTX It posted a 42 . 79% return over the trailing one-year period, beating 96% of category peers. Managers Thyra Zerhusen, Marie Lorden, and Mary Pierson buy niche companies with strong growth (ideally from increasing market share) and less debt that are trad- ing at a discount. The portfolio is a fairly concen- trated 40 - 45 stocks. They tend to buy and hold but are not shy about selling when picks get too big. In the past 12 months, it has benefited enormously from stock selection, particularly in the consumer cyclical and technology sectors. Top holdings like H&R Block HRB , Gannett GCI , and the New York Times Company NYT have seen returns north of 50% .
Ten Best-Performing Funds
Fund Name
YTD Cat Rank %
Ten Worst-Performing Funds 99 Hussman Strategic Total R 99 Royce Low Priced Stock Sv 99 First Eagle US Value A 98 PIMCO Foreign Bond (Unhed 98 PIMCO Inflation Response 98 Permanent Portfolio 98 Royce Micro-Cap Invmt 98 Royce Premier Invmt 98 Delafield Fund 97 ClearBridge Aggressive Gr 1 Fairholme Focused Income 1 Invesco Equity and Income 1 Oakmark International I 1 PRIMECAP Odyssey Aggressi 1 Vanguard Capital Opportun 1 Vanguard Capital Value In 1 William Blair Small Cap G 1 Third Avenue Real Estate 2 Vanguard Precious Metals 2 Fund Name FPA Capital YTD Cat Rank %
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