(PUB) Morningstar FundInvestor

January 2 014

Morningstar FundInvestor

3

If you have this fund in your 401 (k) or it’s offered through your advisor, you’re in luck.

What the Experts Say

Bill Gross

Stay on the short end of the yield curve. The Fed won’t hike rates until 2016.

Brian Rogers

Few things are cheap. Emerging markets are among the better opportunities.

Aston/Montag & Caldwell Growth MCGFX is well- positioned if GMO is correct that U.S. high-quality stocks are the place to invest over the next several years. Ron Canakaris and his team have long favored such issues. This fund, which has disappointed in the past couple of years, has historically rebounded nicely from periods of underperformance. More important, its emphasis on quality has made it a fairly stable investment in troubled times. Royce Special Equity Multi-Cap RSMCX isn’t tech- nically forgotten as it’s still pretty young. But inves- tors have known about Charlie Dreifus’ accounting chops for eons and they’ve overlooked this fund, which has a mere $ 180 million to its name. Dreifus owns a focused portfolio of stocks that meet rigor- ous tests for balance-sheet health, cash flow, and valuation. Historically his funds have held up well in downturns, and I’d expect the same here. Dodge & Cox Stock DODGX isn’t small, but it’s one of the best funds to get more than $ 1 billion in redemp- tions in 2013 and $ 10 billion the past three years. Dodge simply does value investing well and charges its shareholders little. You’ll be hard-pressed to find more experience and continuity than at Dodge & Cox. Managers own the firm and have to sell back after they retire, thus ensuring stability for the long term. It’s a great core holding for patient investors. Cash When asset prices rise, cash makes sense as a way to be ready for the next downturn. Of course, your current return on cash is going to be near zero until something gets cheap, and then you might enjoy a very nice return. As Warren Buffett likes to say, in investing you don’t have to swing at a pitch you don’t like. You can take a thousand pitches before you find one you like. How Have My Past Picks Fared? Come to mfi.morningstar.com during January as I’ll walk through how my past buying recommendations have fared. œ

Bob Johnson

Economic growth will remain moderate in the 2.0% to 2.5% range in 2014.

David Marcus

The most attractive opportunities remain in the developed European markets.

Jason Hsu

Raising equity weightings in 2014 will likely prove extraordinarily costly.

Dan Fuss

We are greatly reducing our position in long maturity, very high-quality debt.

Dennis Stattman

Japanese equities offer the best risk/reward trade-off.

Jeffrey Gundlach

Emerging-markets bonds should outperform U.S. high-yield bonds.

supported by Colin Hudson, Matt Logan, and Edward Wojciechowski, who have good resumes for the task at hand, there’s plenty of appeal left in this fund. FPA Perennial FPPFX is an appealing mix of growth and value characteristics run by Eric Ende, Steve Geist, and Greg Herr. They look for small- and mid-cap stocks that have high returns on capital, low debt, and potential for above-average growth. They have produced strong long-term returns with modest risk. The fund has only $ 326 million in assets in part because it was a load fund with no salesforce. However, it was recently converted to no-load, so it’s worth a good long look. LKCM Equity LKEQX is another old-school fund that a lot of folks have missed. It’s a large-cap fund that emphasizes quality companies with low debt. That leads to stocks like Monsanto MON , Apple AAPL , and Honeywell HON . As you might guess, the fund held up nicely in 2008 and 2011 , though it lagged a bit in 2013 . Lead manager Luther King is a very experienced investor backed by a surprisingly large, 35 -member investment team. Thus, you have a small fund with low fees but the backing of a big group of skilled professionals. American Funds Capital World Growth & Income CWGIX is still a giant, but it has been heavily redeemed of late along with many of its fellow Amer- ican Funds. This fund’s appeal hasn’t changed a lick, however. American has outstanding global analyst coverage and low costs. This fund has posted uninspiring five-year returns, but it has earned excellent 10 - and 15 -year results. Sometimes, the best opportunities are right there under our noses.