(PUB) Morningstar FundInvestor

13

Morningstar FundInvestor

July 2 013

FPA Perennial Has a Strong 12 Months Leaders & Laggards | Kailin Liu

tile performance in the past, but in recent months its concentration has helped. The portfolio’s high stake in MBIA bonds pushed fund performance to the top of its category in May 2013 when MBIA won a $ 1 . 7 billion settlement with Bank of America BAC .

Laggards Domini Social Equity DSEFX

Leaders FPA Perennial FPPFX

Ten Best-Performing Funds

This socially conscious large-blend fund landed in the bottom decile of its peer group with a 14 . 70% return for the trailing one-year period. A quantitative team at Wellington Management subadvises the fund and chooses from a universe of stocks that pass the standards committee at Domini Social Invest- ments. Wellington’s team creates a model to over- weight or underweight acceptable stocks relative to the S&P 500 , while remaining within 3 . 0 percen- tage points of the index’s sector weighting and within 1 . 5 percentage points of the index’s individual stock weightings. In the past 12 months, the fund has suffered from underperforming stock picks in the consumer cyclical, real estate, and technology sectors. Hussman Strategic Total Return HSTRX This conservative-allocation fund lost 7 . 71% , almost 15 percentage points worse than the category ave- rage. Manager John Hussman uses historical price trends, trading volume, and valuation measures to select stocks and asset classes. The resultant port- folio is dramatically different from its typical peer: In the past, the fund has tended to keep 50% – 60% of assets in U.S. government securities, 20% in stocks (typically precious metals, energy, and utilities), and the rest in cash. The cash stake, which was between 11% and 50% over the past 12 months, kept the fund from participating in the equity rally. Adding to the sting was the dismal performance of the fund’s stake in precious-metal miners. Top holdings like Agnico Eagle Mines AEM , Newmont Mining NEM , and Barrick Gold ABX lost between 30% and 60% . œ Contact Kailin Liu at kailin.liu@morningstar.com

Fund Name

YTD Cat Rank %

This mid-growth fund gained 28 . 06% in the past 12 months, beating out 96% of its category peers. Managers Eric Ende and Steve Geist buy high-quality small- and mid-cap stocks with high returns on capital, as well as low debt and healthy potential growth, and prefer to do so at a reasonable price. Their selec- tivity results in a concentrated portfolio of fewer than 40 stocks. The managers are also benchmark-agnostic, so assets can pool in a few sectors. In the past few months, the fund has benefited more from stock selection than sector weights. Several top holdings like CarMax KMX , Signet Jewelers SIG , and Wabco Holdings WBC have posted returns north of 40% in the past 12 months. Artisan International Small Cap ARTJX This foreign small/mid-growth fund landed comfort- ably in the top decile of its category with a 30 . 54% gain over the trailing one-year period. Lead manager Mark Yockey and his team buy fast-growing (some- times-pricey) companies, high-quality stable growth names, and value buys. Yockey and his team have also tended to focus on small caps more exclusively than peer funds. In the past 12 months, the fund benefited from excellent picks, especially in the consumer defensive sector. International food and drink companies like Glanbia, Super Group, and Calbee all returned more than 50% in the past 12 months. Fairholme Focused Income FOCIX This high-yield fund smoked its category with a 22 . 94% gain for the past 12 months. Manager Bruce Berkowitz runs a highly concentrated portfolio of distressed debt. His picks are bold, but he doesn’t scrape the barrel; picks should have enough liquida- tion value to cover their debts, as well as a path to financial health. This bold strategy has caused vola-

Artisan International Val ClearBridge Aggressive Gr 1 Fairholme Focused Income 1 Invesco Equity and Income 1 Oakmark International I 1 PRIMECAP Odyssey Growth 1 Third Avenue Real Estate 1 Vanguard Capital Opportun 1 Vanguard Capital Value In 1 Vanguard Precious Metals 1 1

Ten Worst-Performing Funds

Fund Name

YTD Cat Rank %

Delafield Fund

99

FPA Capital 99 PIMCO Inflation Response 99 Royce Low Priced Stock Sv 99 Amana Growth 98 Appleseed 98 First Eagle US Value A 98 Janus Overseas T 98 Permanent Portfolio 98 Royce Micro-Cap Invmt 98