Morningstar Advisor - February/March 2011 - (Page 28)

Investment Briefs Morningstar Announces Managers, CEO of the Year On Jan. 5, Morningstar announced its 2010 Manager of the Year award winners: Domestic-Stock Manager of the Year: Bob Goldfarb and David Poppe, Sequoia SEQUX International-Stock Manager of the Year: A recent poll conducted by Scottrade of 226 registered investment advisors found that 71% don’t believe $1 million is adequate for the average American family. Most went so far as to state that families will need to save double, or even more than triple, the amount. With people living longer, Social Security uncertainty, and inflationary pressure mounting, such a belief may not be so far-fetched. The graph below illustrates the amount of monthly savings needed to reach $2 million by age 65 for assorted ages assuming various hypothetical rates of return. Obviously, the earlier your clients start, the easier it will be for them to achieve their retirement-savings goals, because of the power of compounding investment returns. This graph can serve as a real eye-opener for those who have procrastinated when it comes to stashing away money for retirement. they reach their 40s or 50s. The good news for these investors is that they still have enough time to change their savings behavior and achieve their goals, but they will need to act quickly and be extremely disciplined about their savings. Brent Lynn, Janus Overseas JAOSX Fixed-Income Manager of the Year: Fairholme, DoubleLine Among Best New Funds Russel Kinnel, Morningstar’s director of mutual fund research, recently selected his list of 2010’s best new funds: r DoubleLine Total Return Bond DBLTX Expense Ratio: 0.49% Manager: Jeffrey Gundlach r PIMCO EqS Pathfinder PTHDX Expense Ratio: 1.24% Managers: Anne Gudefin and Charles Lahr Michael Hasenstab, Templeton Global Bond TPINX “Each year we dig deep into our coverage universe to identify those managers who led top-performing funds for the past year and have also exhibited exemplary stewardship and stellar long-term results,” says Karen Dolan, director of mutual fund analysis for Morningstar. “While the market continued to rebound in 2010, these managers posted exceptional gains—enough to overcome the difficult market environment of the past few years that has much of the competition still reeling.” Morningstar also named Alan Mulally, president and CEO of Ford F, as its 2010 CEO of the Year. “Ford has prospered under Mulally’s leadership, and we expect the company’s earnings growth to rise over the next few years as the industry absorbs latent demand,” says Paul Larson, equities strategist and editor of Morningstar StockInvestor. Monthly Savings Needed to Accumulate $2 Million by Age 65 7% Return 6% Return 5% Return $12,204 $12,880 r Vanguard Explorer Value VEVFX Expense Ratio: 0.59% Managers: Thomas Duncan, William Teichner, Amy Minella, Eugene Fox, Robert Kirkpatrick, Eduardo Brea, and Brian Walton r Evermore Global Value EVGBX Load: 5% Expense Ratio: 1.6% Manager: David Marcus 15K 12 $3,839 $4,329 $4,866 9 $1,004 $1,311 $1,639 6 3 $762 $1,991 $2,403 25-year-old 35-year-old 45-year-old $11,555 55-year-old r Fairholme Focused Income FOCIX Expense Ratio: 0.50% Manager: Bruce Berkowitz r Jensen Value JNVSX Expense Ratio: 1.25% Managers: Kurt Havnaer, Robert McIver, Robert Millen, Eric Schoenstein, and Robert Zagunis r Hartford International Value HILAX Load: 5.5% Expense Ratio: 1.40% Manager: Theodore Jayne r Artisan Global Equity ARTHX Will $1 Million Fill the Retirement Bill? The 2010 Retirement Confidence Survey by the Employee Benefit Research Institute found that many workers continue to be unaware of how much they need to save for retirement. Less than half of workers (46%) report they or 7% Return 6% Return 5% Return Has the $1 million retirement nest egg gone their spouse have tried to calculate how much $12,880 the way of the dodo? What was once the money they will need to have saved for a $12,204 $11,555 ultimate goal for a retiree has encountered a comfortable retirement by the time they retire. fair amount of debate lately, according to This is where an advisor’s guidance is Morningstar research and communications imperative. manager Jim Licato. So, exactly how much will your clients need at retirement? The answer Unfortunately, many people do not start to $4,866 $4,329 each investor. will obviously vary for aggressively save for retirement until $3,839 $1,639 $1,991 $2,403 28 Morningstar Advisor February/March 2011 35-year-old 45-year-old 55-year-old

Table of Contents for the Digital Edition of Morningstar Advisor - February/March 2011

Morningstar Advisor - February/March 2011
Letter From the Editor
First, Do No Harm
Do You Use Active or Passive Investment Strategies?
Best of Both Worlds
How to Build an Index
Accountable Investor
Nice Guys Finish First
Four Picks for the Present
Investment Briefs
A New Guardrail Against Risk
Tech Loosens the Purse Strings (a Bit)
It’s More About Costs Than Active or Passive
Play Your Stars
In Between Active and Passive
Selling Beta as Alpha
The Weighting Game, and Other Puzzles of Indexing
Leaving the Nest
Redefining Credit Risk
Another Vote for Market-Based Credit-Risk Measures
Big Opportunities in Small-Cap Stocks
Benchmarks? What Benchmarks?
Mutual Fund Analyst Picks
50 Most Popular ETFs
Undervalued Stocks With Wide Moats
VA Sales Slide, but Assets on the Rise
Indexing’s Lunatic Fringe

Morningstar Advisor - February/March 2011