Morningstar Advisor - Summer 2007 - 58

Screens Finding Funds with Conviction by Karen Dolan Thompson Plumb Growth THPGX This classic growth fund doesn’t get carried away with momentum factors. Instead, manager John Thompson favors stocks with histories of healthy cash flow, strong balance sheets, and attractive returns on equity. He pays attention to price, too. He hasn’t had any trouble finding ideas in the current environment because several high-quality steady growers are trading at attractive prices. Yacktman YACKX If you value a consistent showing, you may want to skip over Yacktman Fund. This value hound tends to hold up—and even thrive— when markets tumble and lag its peers during rallies. Lately, it has been deserting traditional value fare for consumer-products firms that benefit from disposable products, repeatable sales, and strong brand names. DFA U.S. Small Cap Value II DFAVX DFA understands trading costs better than anybody and that knowledge is a key component of its passive strategy. Though this fund is small, DFA manages a lot of money in small-cap value. In a twist unique to DFA, size works in the fund’s favor because it gives DFA the power to negotiate better prices for stocks in exchange for taking unwanted blocks of shares off other investors’ hands. K A Morningstar study published in the April edition of Morningstar FundInvestor found that concentrated mutual funds with low turnover are less volatile than their category peers in subsequent periods. We’ve taken that idea and added some criteria to come up with a short list of investing ideas for you that pack some punch, but don’t keep you awake at night. You can perform this screen in Morningstar Advisor Workstation and Principia Mutual Funds. First, we want to find equity funds that have the characteristics that proved beneficial in the study. So, we looked for those that have compact portfolios and trade little: stock-specific bets. Beyond that, we’ll narrow down the list further to avoid expensive funds and those that may be bloated. We’ll define nimble here as asset bases that are less than $1 billion and inexpensive as expense ratios less than 1.25 percent. Manager Tenure (Longest) and and Net Assets $MM Audited Exp. Ratio 10 1,000 1.25 Finally, we need to single out funds that are open to new investors and take a look at the oldest share class (or if you have a particular share class that you prefer, you can search by that instead): Karen Dolan, CFA, is a mutual fund analyst with Morningstar. Total # of Holdings and or and Morningstar Category Morningstar Category Turnover Ratio % 50 Dom. Stock Intl. Stock 50 and Special Criteria Purchase Constraints Distinct Portfolio Closed to New Invts. Next, we’ll single out managers who have been around over a full market cycle. After all, experience matters, and it is especially critical for funds that are making sizeable Our search yielded 48 funds. You can revise our criteria to narrow your own searches to get a smaller number of results. But of the 48 results, here are three that our mutual fund analysts particularly like: Share Your Best Ideas Send us a favorite fund screen that you use in your practice. We’ll consider printing it in this space for the benefit of other advisors. And we’ll acknowledge your contribution. Submit it to magazine_editor@morningstar.com 58 Morningstar Advisor Summer 2007

Morningstar Advisor - Summer 2007

Table of Contents for the Digital Edition of Morningstar Advisor - Summer 2007

Morningstar Advisor - Summer 2007
Contents
Letter from the Publisher
Get to Know the Bond “All-Stars”
Research Briefs
Our Stewardship Test Gets Tougher
Save It for Later
Too Many Oranges
Best of Both Worlds
No Two Clients Are Alike
When It Comes to VAs, It’s Seller Beware
Hands On: Finding the Suitable Fund Share Class for Your Client
Fund Style Can Drift Off Course
Sticking to Their Style, Through Thick and Thin
Marathon Man
Growth, With a Chaser
A Menu of Ideas to Fill Five Market Baskets
Funds: Finding Funds with Conviction
Stocks: So You Say You Want Income?
All Eyes on China
Mutual Fund Analyst Picks
Undervalued Stocks
Most Popular Variable Annuities
What’s New at Morningstar and on the Web
The Advisor’s Economic Moat
Morningstar Advisor - Summer 2007 - Intro
Morningstar Advisor - Summer 2007 - Morningstar Advisor - Summer 2007
Morningstar Advisor - Summer 2007 - Cover2
Morningstar Advisor - Summer 2007 - Contents
Morningstar Advisor - Summer 2007 - 2
Morningstar Advisor - Summer 2007 - 3
Morningstar Advisor - Summer 2007 - 4
Morningstar Advisor - Summer 2007 - Letter from the Publisher
Morningstar Advisor - Summer 2007 - 6
Morningstar Advisor - Summer 2007 - 7
Morningstar Advisor - Summer 2007 - Get to Know the Bond “All-Stars”
Morningstar Advisor - Summer 2007 - 9
Morningstar Advisor - Summer 2007 - Research Briefs
Morningstar Advisor - Summer 2007 - 11
Morningstar Advisor - Summer 2007 - Our Stewardship Test Gets Tougher
Morningstar Advisor - Summer 2007 - 13
Morningstar Advisor - Summer 2007 - Save It for Later
Morningstar Advisor - Summer 2007 - 15
Morningstar Advisor - Summer 2007 - Too Many Oranges
Morningstar Advisor - Summer 2007 - 17
Morningstar Advisor - Summer 2007 - Best of Both Worlds
Morningstar Advisor - Summer 2007 - 19
Morningstar Advisor - Summer 2007 - 20
Morningstar Advisor - Summer 2007 - No Two Clients Are Alike
Morningstar Advisor - Summer 2007 - When It Comes to VAs, It’s Seller Beware
Morningstar Advisor - Summer 2007 - 23
Morningstar Advisor - Summer 2007 - 24
Morningstar Advisor - Summer 2007 - 25
Morningstar Advisor - Summer 2007 - 26
Morningstar Advisor - Summer 2007 - 27
Morningstar Advisor - Summer 2007 - 28
Morningstar Advisor - Summer 2007 - Hands On: Finding the Suitable Fund Share Class for Your Client
Morningstar Advisor - Summer 2007 - 30
Morningstar Advisor - Summer 2007 - 31
Morningstar Advisor - Summer 2007 - 32
Morningstar Advisor - Summer 2007 - 33
Morningstar Advisor - Summer 2007 - Fund Style Can Drift Off Course
Morningstar Advisor - Summer 2007 - 35
Morningstar Advisor - Summer 2007 - 36
Morningstar Advisor - Summer 2007 - Sticking to Their Style, Through Thick and Thin
Morningstar Advisor - Summer 2007 - 38
Morningstar Advisor - Summer 2007 - 39
Morningstar Advisor - Summer 2007 - 40
Morningstar Advisor - Summer 2007 - 41
Morningstar Advisor - Summer 2007 - 42
Morningstar Advisor - Summer 2007 - Marathon Man
Morningstar Advisor - Summer 2007 - 44
Morningstar Advisor - Summer 2007 - 45
Morningstar Advisor - Summer 2007 - 46
Morningstar Advisor - Summer 2007 - 47
Morningstar Advisor - Summer 2007 - Growth, With a Chaser
Morningstar Advisor - Summer 2007 - 49
Morningstar Advisor - Summer 2007 - 50
Morningstar Advisor - Summer 2007 - 51
Morningstar Advisor - Summer 2007 - A Menu of Ideas to Fill Five Market Baskets
Morningstar Advisor - Summer 2007 - 53
Morningstar Advisor - Summer 2007 - 54
Morningstar Advisor - Summer 2007 - 55
Morningstar Advisor - Summer 2007 - 56
Morningstar Advisor - Summer 2007 - 57
Morningstar Advisor - Summer 2007 - Funds: Finding Funds with Conviction
Morningstar Advisor - Summer 2007 - 59
Morningstar Advisor - Summer 2007 - Stocks: So You Say You Want Income?
Morningstar Advisor - Summer 2007 - 61
Morningstar Advisor - Summer 2007 - 62
Morningstar Advisor - Summer 2007 - All Eyes on China
Morningstar Advisor - Summer 2007 - 64
Morningstar Advisor - Summer 2007 - 65
Morningstar Advisor - Summer 2007 - 66
Morningstar Advisor - Summer 2007 - 67
Morningstar Advisor - Summer 2007 - Mutual Fund Analyst Picks
Morningstar Advisor - Summer 2007 - 69
Morningstar Advisor - Summer 2007 - 70
Morningstar Advisor - Summer 2007 - 71
Morningstar Advisor - Summer 2007 - Undervalued Stocks
Morningstar Advisor - Summer 2007 - 73
Morningstar Advisor - Summer 2007 - Most Popular Variable Annuities
Morningstar Advisor - Summer 2007 - 75
Morningstar Advisor - Summer 2007 - What’s New at Morningstar and on the Web
Morningstar Advisor - Summer 2007 - 77
Morningstar Advisor - Summer 2007 - 78
Morningstar Advisor - Summer 2007 - 79
Morningstar Advisor - Summer 2007 - The Advisor’s Economic Moat
Morningstar Advisor - Summer 2007 - Cover3
Morningstar Advisor - Summer 2007 - Cover4
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