Morningstar Advisor - April/May 2012 - (Page 25)

previous manager, Robert Smith, who managed the fund from 1997 to 2007. Bartolo had a hard time out of the gates in 2007 and 2008. Fidelity Balanced FBALX Most of this fund’s 4-star rating was achieved under former manager Larry Rakers, who managed the fund from 2002 through late 2008. Fidelity replaced Rakers and his highly eclectic approach with a more index-hugging, multimanager approach. Vanguard Morgan Growth VMRGX A smattering of smaller-cap stocks has given this fund a boost over the long term, resulting in a fine record versus other large-growth peers. However, compared with the Russell 3000 Growth Index, a benchmark with more smaller-cap holdings that better tracks this fund’s holdings, the fund and its five subadvisors haven’t measured up. Best Long-Term Managers Versus Their Benchmarks Russel Kinnel took a look at Morningstar 500 funds versus their benchmarks over each fund manager’s tenure through December 2011, excluding fund managers with tenures of less than five years. Here are the top five, ranked by annualized outperformance. Matthews Asia Dividend Investor MAPIX leads the way with a 8.7% annualized return versus a 0.7% loss for the MSCI AC Asia Pacific Index and a 1% loss for its category peers. Fairholme FAIRX is up 9.4% annualized compared with 0.6% for the S&P 500 since its December 1999 launch.That is a comforting reminder after a horrible 2011. William Blair Small Cap Growth WBSNX is an even bigger surprise. This fund had a great first half of the decade but a lousy second half. Over the past 12 years, it has returned 9.4% annualized versus 0.7% for the Russell 2000 Growth and 2.7% for the small-growth category. CGM Focus CGMFX is still up 10.7% compared with 3.8% for the S&P 500 over the past 14 years despite a horrific past three. Thus is the promise and danger of this fund neatly summarized. Vanguard Capital Opportunity VHCOX has gained 11.2% over the past 14 years compared with 5% for the Russell Mid Cap Growth Index and 3% for the average large-growth fund. The Primecap team running this fund does excellent in-depth growth research. Put it with Vanguard’s low fees and you have a winner. MorningstarAdvisor.com 25 http://www.wasatchfunds.com http://www.MorningstarAdvisor.com

Table of Contents for the Digital Edition of Morningstar Advisor - April/May 2012

Morningstar Advisor - April/May 2012
Contents
Contributors
Letter From the Editor
We’re Too Smart
How Do You Use Alternatives?
Taking the Lead
How to Find Economic Moats
The Beauty of Currencies
No Clarity on Bonds
Four Picks for the Present
Investment Briefs
Performance Chasing, Evaluated
Technology’s Slim Pickings
How Much Is Enough?
The Fear Bubble
Three Traits of a Successful Long-Short Equity Manager
Why Absolute-Return Funds Fail to Deliver
An Economist’s Response to Crises
Undiscovered in Plain Sight
Untangling ETF Tax- Efficiency Myths
Central Banks Driving the Gold Rush
U.S. Industrials Could Add Some Magic to Europe-Weary Portfolios
No-Hesitation Allocation Funds
Our Favorite Mutual Funds
50 Most Popular ETFs
Undervalued Stocks With Wide Moats
The Greatest Story Ever Told

Morningstar Advisor - April/May 2012