(PUB) Morningstar FundInvestor

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USAA World Growth Joins the 500 Changes to the 500 | Russel Kinnel

The fund’s five-year returns are 10 . 4% , placing it in the top decile of the large-growth category. The fund has $ 700 million in assets and charges 1 . 24% . Our third addition is Silver-rated Wasatch Long/ Short FMLSX . The fund is run by Ralph Shive and Michael Shinnick, who also run Wasatch Large Cap Value FMIEX . The fund is usually net long in the range of 30% – 90% featuring about 55 long positions and 15 shorts. They combine fundamental, macro, and technical analysis to build their portfolio. Although they tend to short high-valuation names like Starbucks SBUX , they will also go long on growth names, as evidenced by Apple. See the facing page for more details. Three Go Out To make room, we are dropping three funds in redemptions. Litman Gregory Masters Focused Opportunities MSFOX is a decent fund, but with assets at just $ 66 million, we are dropping it from coverage. Janus Global Select JORNX is rated Neutral as the fund has become more bland under George Maris. It is also on the way out. Columbia Value and Restructuring UMBIX has been turned into a clone of Columbia Contrarian Core LCCAX , so it’s redundant and may be merged into the former fund. œ

We are adding a world-stock fund, a large-blend fund, and a long-short fund.

What is Morningstar FundInvestor 500 ? The Morningstar FundInvestor 500 features the industry’s best and most notable funds. Use the list to get new investment ideas and track the funds you already own. FundInvestor subscribers have access to one-page monthly reports on all 500 funds on mfi.morningstar.com. Just type in the name or ticker of the fund in the search box.

USAA World Growth USAWX is a world-stock fund run by David Mannheim and Roger Morley of MFS . It has earned a Morningstar Analyst Rating of Silver. The managers’ strategy is to buy high-quality com- panies trading at modest valuations. That’s not partic- ularly novel, but few execute it as well. It has led to above-average returns with below-average risk. The fund has returned an annualized 10 . 2% over the past 10 years to top 85% of world-stock funds, and it has done so with impressive consistency. The fund hasn’t had calendar-year returns in the bot- tom quartile since 2005 . The fund charges 1 . 30% in expenses and has $ 920 million in assets. I’m also adding large-growth fund Lateef LIMAX . Although it officially carries a load, the fund is available in some of the biggest No Transaction Fee platforms without a load. This 4 -star fund is run by Quoc Tran, James Tarkenton, and Matt Sauer. Tran worked for Weitz funds for three years before joining Lateef. Tarkenton and Sauer worked together at Oak Value fund. Tarkenton then worked for RBO & Co. before joining Lateef in 2008 . Sauer worked at Ariel until early 2012 when he joined Lateef. The managers looks for companies with sustainable competitive advantages trading at modest prices. They run a focused portfolio with about 20 stocks. If they think a company’s growth rate is threatened, the managers may sell as they did with Apple AAPL in 2012 . They will also sell if a stock has grown so much that they no longer have sufficient margin of safety.

Summary of Changes

Add

Drop

Lateef

Columbia Value and Restructuring

USAA World Growth

Janus Global Select

Wasatch Long/Short

Litman Gregory Masters Focused Opp