Morningstar Advisor - August/September 2010 - 79

In the Loop

New at Morningstar
New Index Follows StockInvestor’s Lead; PowerShares ETF to Use Index as Benchmark

2010 Morningstar Investment Conference: Gundlach, McNabb, and Reynolds Speak Up

June’s Morningstar Investment Conference featured more than its fair share of opinionated speakers, and the conference’s keynote speakers set the tone. DoubleLine’s Jeffrey Gundlach used his address on June 23 to explore the potentially devastating imbalance between the United States’ gross domestic product and its projected outlays. While some analysts have suggested solutions such as increasing GDP growth, lowering interest in government debt, or a transfer of foreign capital, Gundlach argued that each of these is either unrealistic or has already been done. Instead, he said, the country must prepare for fundamental and wholesale legislative solutions. “Policy change must happen,” he said. Vanguard president and CEO Bill McNabb dedicated June 24’s keynote presentation to urging attendees to consider the many reasons that restoring trust—among and between regulators, financial professionals, and investors—is critical to renewing economic prosperity. “Trust is absolutely essential in terms of how the currency system works, in how banking works, how the capital markets work,” he said.

Admonishing many of the financial industry’s practices, standards, and opaque investment vehicles blamed for contributing to the economic downswing, McNabb called for vastly improved simplicity, transparency, and candor. “If we can’t explain an investment to one of our clients in five minutes or less, we probably shouldn’t be putting that investment into their portfolio,” he said. Bob Reynolds’ wide-ranging conversation with Morningstar’s Don Phillips on June 24 covered 401(k)s, potential solutions to the United States’ obligations to retirees, and pending reform mandates from legislators. A veteran of the 401(k) platform, the Putnam CEO said the 401(k)’s greatest attribute is its adaptability, a trait he expects will prove critics wrong. “It’s up to industry leaders to take a step forward and say, ‘Wait a minute. The system’s not broken; it can be fixed,’ ” he said. Expanding the number of Americans investing in 401(k)s would help the country solve another major dilemma: how to fulfill obligations to retirees. Calling the looming reckoning with Social Security and Medicare “an easy problem to fix,” Reynolds said he expects major reforms to arrive next year. The next Morningstar Investment Conference is scheduled for June 8–10, 2011.

Morningstar has created the Morningstar StockInvestor Core Index, a diversified portfolio of stocks from the Tortoise and Hare portfolios featured in the popular Morningstar StockInvestor newsletter. The Tortoise and Hare portfolios comprise high-quality companies that are trading at sharp discounts to what Morningstar’s equity research analysts believe they’re worth. Invesco PowerShares Capital Management LLC has licensed the StockInvestor Core Index to serve as the new benchmark for the PowerShares Value Line Industry Rotation Portfolio ETF. The ETF has been renamed the PowerShares Morningstar StockInvestor Core Portfolio PYH to reflect the benchmark change. “The new StockInvestor Core Index harnesses the proprietary research and analyst expertise of Morningstar’s equity research team,” said Sanjay Arya, director of Morningstar Indexes. “This index spotlights Morningstar’s disciplined approach to investing and stock-picking, using fundamental analysis and the Morningstar Economic Moat Rating to determine whether a company’s stock price is fairly valued.” The StockInvestor Core Index holds almost all of the stocks from StockInvestor’s Tortoise and Hare portfolios. These portfolios focus on stocks of relatively stable, high-quality businesses that are well entrenched in the various markets in which they operate. Companies in the Tortoise and Hare portfolios span an array of industries and numerous geographic locales. When coming up with the ratings critical in selecting stocks for the portfolios, Morningstar’s equity analysts conduct extensive research on industry dynamics, competitive positions, and the sustainability of any advantages that the businesses have.

MorningstarAdvisor.com 79


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Morningstar Advisor - August/September 2010

Table of Contents for the Digital Edition of Morningstar Advisor - August/September 2010

Morningstar Advisor - August/September 2010
Contents
New on MorningstarAdvisor.com
Contributors
Letter From the Editor
What Aspects of Health-Care Reform Will Most Affect Your Clients?
Bonds, Chicago Style
Investment Briefs
Which Risk Are You Managing?
Eye on the Prize
Advisors Can’t Rely on Fidelity Alone
Health Care Gets Back to Business
An Opportune Time to Bet the Pharm
Reform’s Impact on Other Health-Care Industries
Top Takeover Targets in Biotech
After Reform, Narrow-Moat Firms Have Strong Prospects in Diagnostics
Health-Care Investing Alive and Well
Quest for Knowledge
Four Picks for the Present
How to Make Your Bond Portfolio Inflation-Resistant
Weeding Through the Energy Patch
Uncertainty and Value in Basic Materials
Stock Market Doom-Busters
Hunting Down European Debt-Dodgers
Mutual Fund Analyst Picks
50 Most Popular Equity ETFs
Undervalued Stocks With Wide Moats
VA Sales Slip a Bit in First Quarter
New at Morningstar
Star Wars, the Sequel
Morningstar Advisor - August/September 2010 - Morningstar Advisor - August/September 2010
Morningstar Advisor - August/September 2010 - Cover2
Morningstar Advisor - August/September 2010 - 1
Morningstar Advisor - August/September 2010 - 2
Morningstar Advisor - August/September 2010 - Contents
Morningstar Advisor - August/September 2010 - 4
Morningstar Advisor - August/September 2010 - 5
Morningstar Advisor - August/September 2010 - New on MorningstarAdvisor.com
Morningstar Advisor - August/September 2010 - 7
Morningstar Advisor - August/September 2010 - Contributors
Morningstar Advisor - August/September 2010 - Letter From the Editor
Morningstar Advisor - August/September 2010 - What Aspects of Health-Care Reform Will Most Affect Your Clients?
Morningstar Advisor - August/September 2010 - 11
Morningstar Advisor - August/September 2010 - Bonds, Chicago Style
Morningstar Advisor - August/September 2010 - 13
Morningstar Advisor - August/September 2010 - Investment Briefs
Morningstar Advisor - August/September 2010 - 15
Morningstar Advisor - August/September 2010 - Which Risk Are You Managing?
Morningstar Advisor - August/September 2010 - 17
Morningstar Advisor - August/September 2010 - 18
Morningstar Advisor - August/September 2010 - Eye on the Prize
Morningstar Advisor - August/September 2010 - 20
Morningstar Advisor - August/September 2010 - 21
Morningstar Advisor - August/September 2010 - Advisors Can’t Rely on Fidelity Alone
Morningstar Advisor - August/September 2010 - 23
Morningstar Advisor - August/September 2010 - 24
Morningstar Advisor - August/September 2010 - 25
Morningstar Advisor - August/September 2010 - 26
Morningstar Advisor - August/September 2010 - Health Care Gets Back to Business
Morningstar Advisor - August/September 2010 - An Opportune Time to Bet the Pharm
Morningstar Advisor - August/September 2010 - 29
Morningstar Advisor - August/September 2010 - Reform’s Impact on Other Health-Care Industries
Morningstar Advisor - August/September 2010 - 31
Morningstar Advisor - August/September 2010 - 32
Morningstar Advisor - August/September 2010 - Top Takeover Targets in Biotech
Morningstar Advisor - August/September 2010 - 34
Morningstar Advisor - August/September 2010 - 35
Morningstar Advisor - August/September 2010 - After Reform, Narrow-Moat Firms Have Strong Prospects in Diagnostics
Morningstar Advisor - August/September 2010 - 37
Morningstar Advisor - August/September 2010 - 38
Morningstar Advisor - August/September 2010 - 39
Morningstar Advisor - August/September 2010 - 40
Morningstar Advisor - August/September 2010 - Health-Care Investing Alive and Well
Morningstar Advisor - August/September 2010 - 42
Morningstar Advisor - August/September 2010 - 43
Morningstar Advisor - August/September 2010 - 44
Morningstar Advisor - August/September 2010 - 45
Morningstar Advisor - August/September 2010 - 46
Morningstar Advisor - August/September 2010 - 47
Morningstar Advisor - August/September 2010 - 48
Morningstar Advisor - August/September 2010 - Quest for Knowledge
Morningstar Advisor - August/September 2010 - 50
Morningstar Advisor - August/September 2010 - 51
Morningstar Advisor - August/September 2010 - Four Picks for the Present
Morningstar Advisor - August/September 2010 - 53
Morningstar Advisor - August/September 2010 - How to Make Your Bond Portfolio Inflation-Resistant
Morningstar Advisor - August/September 2010 - 55
Morningstar Advisor - August/September 2010 - 56
Morningstar Advisor - August/September 2010 - 57
Morningstar Advisor - August/September 2010 - Weeding Through the Energy Patch
Morningstar Advisor - August/September 2010 - 59
Morningstar Advisor - August/September 2010 - 60
Morningstar Advisor - August/September 2010 - Uncertainty and Value in Basic Materials
Morningstar Advisor - August/September 2010 - 62
Morningstar Advisor - August/September 2010 - 63
Morningstar Advisor - August/September 2010 - Stock Market Doom-Busters
Morningstar Advisor - August/September 2010 - 65
Morningstar Advisor - August/September 2010 - Hunting Down European Debt-Dodgers
Morningstar Advisor - August/September 2010 - 67
Morningstar Advisor - August/September 2010 - Mutual Fund Analyst Picks
Morningstar Advisor - August/September 2010 - 69
Morningstar Advisor - August/September 2010 - 70
Morningstar Advisor - August/September 2010 - 71
Morningstar Advisor - August/September 2010 - 50 Most Popular Equity ETFs
Morningstar Advisor - August/September 2010 - 73
Morningstar Advisor - August/September 2010 - Undervalued Stocks With Wide Moats
Morningstar Advisor - August/September 2010 - 75
Morningstar Advisor - August/September 2010 - VA Sales Slip a Bit in First Quarter
Morningstar Advisor - August/September 2010 - 77
Morningstar Advisor - August/September 2010 - 78
Morningstar Advisor - August/September 2010 - New at Morningstar
Morningstar Advisor - August/September 2010 - Star Wars, the Sequel
Morningstar Advisor - August/September 2010 - Cover3
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