(PUB) Morningstar FundInvestor

2

A Tour of Risk in the Morningstar 500 Continued From Cover

strained Bond and other non-traditional-bond funds have also taken in huge sums this year.

Morningstar Analyst Rating Morningstar Category

Morningstar Rating Overall

Avg Eff. Duration

Interest-Rate Risk

Ticker

Vanguard Long-Term Treasury

VUSTX

Long Government

15.32

•

QQQQ

Vanguard Long-Trm Invst-Grd

VWESX

Long-Term Bond

13.61

´

QQQ

Price Risk Harken back to 2000 – 02 and you know the story about equity price risk. The higher a multiple a stock is trading at, the more vulnerable it is to disappoint- ment. In 2000 , tech stocks got bid up to remarkably high levels as though their growth would somehow just keep accelerating. At the same time, tech specu- lation drew off investment from the rest of the world so that other sectors were pretty cheap. Thus, the bear market left value stocks nearly unscathed, but the Nasdaq lost 80% from top to bottom. There are quite a few valuation measures, each with pluses and minuses, but I’ll use price/earnings based on the trailing 12 months. I have excluded real estate funds from results because P/E for REITS isn’t very meaningful. Leading the high P/E funds is Dynamic US Growth DWUGX (P/E 41 ) , an aggressive large-growth fund, which always packs lots of price risk. Next is Brown Capital Management Small Company BCSIX (P/E 31 ) . While the fund does factor in price when buying a stock, the managers are very patient with their stocks even as the valuations rise. Next is Touchstone Sands Capital Select Growth PTSGX with a P/E of 29 . The fund is on a roll of late, but it, too, isn’t shy about owning higher P/E stocks. On the low end is an eclectic group ranging from Fairholme FAIRX (P/E 8 ) to Third Avenue Value TAVFX (P/E 9 ) and DFA Emerging Markets Val- ue DFEVX (P/E 9 ) . If those funds are a bit extreme for your tastes, consider Vanguard International Value VTRIX and Tweedy, Browne Value TWEBX or Vanguard US Value VUVLX . Market Risk The greater a fund’s exposure to the stock market, the worse it will likely do in a bear market. Certainly that’s a risk with CGM Focus CGMFX , which is currently running 130% net long owing to leverage. Manager Ken Heebner has the flexibility to also go short, so quite a wide range of outcomes are pos- sible in the next bear market.

Vanguard Inflation-Prtct Secs

VIPSX

Inflation-Prtct Bnd

8.31

Œ

QQQQ

PIMCO Frgn Bnd (USD-Hedged)

PFODX

World Bond

7.60

•

QQQQ

PIMCO Frgn Bnd (Unhedged)

PFBDX

World Bond

7.59

•

QQQ

High Low

Fidelity Tax-Free Bond

FTABX

Muni National Lg

7.30

Œ

QQQQ

PIMCO Unconstrained Bond

PUBDX

Nontraditional Bnd

1.24

´

QQQ

Vanguard Short-Term Tx-Ex

VWSTX

Muni National Shrt

1.04

•

QQ

PIMCO Short-Term

PSHDX

Ultrashort Bond

0.95

Œ

QQQQ

Wells Fargo Adv S/T Muni Bd

STSMX

Muni National Shrt

0.87

´

QQQQQ

Eaton Vance Floating Rate

EVBLX

Bank Loan

0.15

Œ

QQQ

Morningstar Analyst Rating

Morningstar Category

Morningstar Rating Overall

Asset Alloc Equity % (Net)

Market Risk

Ticker

CGM Focus

CGMFX

Large Blend

128.22

‰

Q

Dynamic US Growth

DWUGX

100.00

— Large Growth

QQQQ

Janus Overseas

JAOSX

Foreign Lg Growth

100.00

•

QQ

Columbia Acorn USA

AUSAX

100.00

— Small Growth

QQQ

Matthews Pacific Tiger

MAPTX

Pac/Asia ex-Jpn Stk QQQQ

99.95

Œ

High Low

Marsico Focus

MFOCX

Large Growth

99.93

‰

QQQ

Weitz Hickory

WEHIX

Mid-Cap Blend

68.27

•

QQQQ

GoodHaven

GO ODX

Large Value

—

62.16

´

Man. & Napier Pro-Blnd Cnsrv Tm EXDAX

Cnsrv. Alloc.

32.51

Œ

QQQQ

Berwyn Income

BERIX

Cnsrv. Alloc.

28.99

•

QQQQQ

Vanguard LifeStrategy Inc

VASIX

Cnsrv. Alloc .

19.82

Œ

QQQ

Hussman Strategic Total Return HSTRX

Cnsrv. Alloc.

17.63

‰

QQ

Fidelity Strategic Real Return FSRRX

Cnsrv. Alloc.

13.78

´

QQ

Morningstar Analyst Rating

Morningstar Category

Morningstar Rating Overall

Avg Credit Quality

Credit Risk

Ticker

Vanguard Conv. Securities

VCVSX

Convertibles

B

Œ

QQQQ

Janus High-Yield

JAHYX

High-Yield Bond

B

´

QQQQ

Eaton Vance Inc. Fund of Boston EVIBX

High-Yield Bond

B

•

QQQQ

Metropolitan Wst Hgh Yld Bnd

MWHYX

High-Yield Bond

B

•

QQQQ

Greenspring

GRSPX

Moderate Alloc.

B

—

QQQQ

Eaton Vance Floating Rate

EVBLX

Bank Loan

B

Œ

QQQQ

Franklin Income

FKINX

Cnsrv Alloc.

B

´

QQQQ

Fidelity Capital & Income

FAGIX

High-Yield Bond

B

High Low

•

QQQQ

Vanguard Long-Term Treasury

VUSTX

Long Government

AAA

•

QQQQ

Vanguard Inflation-Prtct Secs

VIPSX

Inflation-Prtct Bnd

AAA

Œ

QQQQ

Vanguard Interm-Tm Treasury

VFITX

Interm. Gov.

AAA

•

QQQQ