Morningstar Advisor - February/March 2009 - (Page 10) Contributors Arijit Dutta Nassim Taleb’s The Black Swan got Morningstar associate director of mutual fund analysis Arijit Dutta interested in the topic of risk in the summer of 2007. “The idea that most risk measures used in finance could be deeply flawed was quite an eye-opener,” Dutta says. As the credit crisis started to unfold a few months later, he began to see plenty of real-life examples surface. He writes about how some measures failed to signal the coming meltdown (page 34). “Clearly, traditional risk metrics are not to be taken at face value, especially when evaluating portfolios of illiquid assets,” he says. “In-depth holdings-based analysis may well be the only way to truly ascertain risk, though the search for better portfolio-level indicators continues.” David Kathman Mutual fund analyst David Kathman has been covering socially responsible funds for years, and he says manager Nick Kaiser (page 48), whose Amana funds invest according to Islamic law, has always stood out. He first interviewed Kaiser nearly six years ago and was struck by his combination of ethical standards and investment savvy. “I remember telling people then that these funds deserved more attention, because they were unlike anything else out there,” Kathman says. The funds have performed exceptionally since then. “As an analyst, I always enjoy talking to promising managers and getting the word out.” Paul D. Kaplan In mid-2007, Morningstar researcher Paul D. Kaplan began preparing an article on using “fat-tailed” distributions to model asset class returns. These type of models, Kaplan says, do a better job of capturing the market’s extreme events than do standard risk models. It wasn’t long before he realized that we were living through one of those extreme events. Suddenly, his research (page 28) was no mere academic exercise. “Investors need to be familiar with capital market history and understand the shortcomings of risk measures like standard deviation so that they can be prepared for these sorts of market declines,” Kaplan says. “My article is the result of this line of research.” Laura Lallos Laura Lallos is a regular contributor to Morningstar Advisor. She served as a mutual fund analyst and editor at Morningstar from 1993 through 2000, and Greenspring Fund was one of her earliest assignments—and one of the first mutual funds she invested in. Her first opportunity to visit the fund’s Maryland headquarters was for her profile of manager Chip Carlson (page 52), and the trip affirmed her warm feelings for the company. “I joined the office’s regular Friday lunch of sandwiches in the conference room with everyone from receptionist to analysts, all of whom are fund shareholders,” Lallos says. “They are simply a nice bunch of straightforward, smart people. In these times, it is reassuring to feel such confidence in a fund company’s strategy and trustworthiness.” Raymond Biesinger Raymond Biesinger is an illustrator from Edmonton, Canada, and his drawings have appeared in the Financial Times, The New York Times, Nylon, Seed, Monocle, and “almost anything else more than two time zones away from my home,” he says. When he’s drawing economic illustrations, he says that he finds the sheer number of intangibles to be daunting. “Here, we have risk, abstract dollars and cents, and in the Amana funds piece, Islam thrown into the mix. It’s quite easy to walk down the wrong—i.e., cliché—path.” 10 Morningstar Advisor February/March 2009
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