Morningstar Advisor - June/July 2011 - (Page 22)

Investments à la Carte Four Picks for the Present Stock: Visa V Fair Value Estimate $105 Morningstar Rating Uncertainty Very High Economic Moat Wide Moat Trend Stable Market Cap $66.5 billion QQQQ YTD Stock Price Compared With Fair Value Estimate Daily stock price Fair value estimate 120 80 40 (Gaps indicate when fair value estimate was under review.) 7/10/10 11/10/10 3/10/11 We think Visa enjoys one of the widest economic moats that a company can desire— a network that connects thousands of financial institutions. It is very hard to build any network, but duplicating Visa’s is almost impossible. Visa is one of the best-positioned firms to benefit from the growth in paper-free payment methods. The Nilson Report projects that the share of such payments will reach 64% of total payments by 2013 and that the share of card sales will expand to 50% from the current level in the mid-40s. We expect revenue growth to average 14% during the next two years, and we model total purchase volume to increase 14% in 2011 and average 10% through 2016. RJ Towner Exchange-Traded Fund: Cambria Global Tactical ETF GTAA 5/10/10 9/10/10 1/10/11 Total Assets $163.5 million Expense Ratio 0.99% Avg Daily Volume 89,208 Number of Holdings 80 Morningstar Category Multialternative Monthly Premium/Discount 120 80 Total Rtn Since Inception 8.07% 40 0.2 0.1 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 GTAA is an allocation fund for moderate to moderate-aggressive investors who are interested in an actively managed absolute return strategy. For investors who do not have the time or inclination to research, monitor, and rebalance multiple funds, allocation funds such as this provide a simple solution. GTAA follows a unique investment strategy based on the research of portfolio manager Mebane Faber. With a portfolio of 50 to 100 ETFs, the fund 0 5/24/107/15/10 9/10/1011/2/10 1/3/11 3/2 5/25/107/19/109/7/1010/29/10 1/4/11 3/3 5/26/107/20/109/13/1011/3/10 1/10/11 3/4 5/27/107/21/109/8/10 11/1/10 1/5/11 3/1 5/28/107/22/109/14/1011/10/101/11/11 3/7 6/1/10 7/23/109/16/1011/11/101/6/11 3/8 6/2/10 7/27/109/17/1011/12/101/12/11 3/1 6/3/10 7/28/109/20/1011/15/101/7/11 3/9 6/4/10 7/29/109/21/1011/16/101/13/11 3/ 6/10/10 8/2/10 9/22/1011/17/101/14/11 3/ 6/7/10 7/30/109/23/1011/18/101/18/11 33 6/11/10 8/3/10 9/24/1011/19/101/19/11 3 6/14/10 8/4/10 9/27/1011/22/101/20/11 6/9/10 8/10/1010/1/1011/29/101/26/11 6/15/10 8/5/10 9/28/1011/23/101/21/11 6/16/108/11/1010/4/1011/30/101/27/11 6/17/108/6/10 9/29/1011/24/101/24/11 6/18/108/12/1010/5/10 12/1/101/25/11 6/21/108/9/10 9/30/1011/26/10 1/28/11 6/22/108/13/1010/11/1012/10/102/3/11 6/23/108/16/1010/7/1012/2/10 2/1/11 6/24/108/18/1010/14/1012/15/102/11/1 6/25/10 8/27/10 11/5/10 6/28/10 8/30/10 11/8/10 6/29/10 8/31/10 11/9/10 7/16/10 9/9/10 10/6/10 12/3/10 2/2/11 10/13/1012/14/102/10/1 10/8/10 12/6/10 2/4/11 12/13/102/7/11 12/8/10 2/8/11 12/9/10 2/9/11 5/10/106/30/108/23/1010/19/1012/20/102/16/1 5/11/10 7/1/108/19/1010/15/1012/16/102/14/1 5/12/10 7/2/108/20/1010/18/1012/17/102/15/1 5/13/10 7/6/108/24/1010/20/1012/21/102/17// 5/14/10 7/12/10 9/1/1010/25/1012/27/102/23/ 5/17/107/7/108/25/1010/21/1012/22/102/18/ 5/18/107/13/10 9/2/1010/26/1012/28/102/24/ 5/19/107/8/10bonds,10/22/1012/23/102/22/ 5/20/107/14/10 9/3/1010/27/1012/29/102/25 5/21/107/9/108/26/10 10/28/1012/30/10 3/1/ holds U.S. stocks, international6/8/107/26/109/15/1011/4/1012/31/102/283 stocks,8/17/1010/12/1012/7/101/31/11 commodities, and foreign currencies. The portfolio is designed to produce absolute 53 52 returns by using a systematic trend-following 51 strategy that employs a very wide diversifica50 tion of holdings. Timothy Strauts 49 48 47 46 45 11/1/1011/26/1012/23/101/20/112/11/11 11/2/1011/29/1012/27/101/21/112/14/11 11/3/1011/30/1012/28/101/24/112/15/11 11/4/10 12/1/10 12/29/101/25/112/16/11 11/5/10 12/2/10 12/30/101/26/112/17/11 11/8/10 12/3/10 12/31/101/27/112/18/11 11/10/1012/7/10 1/3/11 1/28/112/22/11 11/9/10 12/6/10 1/4/11 1/31/112/23/11 11/11/1012/8/10 1/5/11 2/1/11 2/24/11 11/12/1012/10/10 1/6/11 2/2/11 2/25/11 11/15/1012/13/10 1/10/11 2/3/11 2/28/11 11/16/1012/14/10 1/7/11 2/4/11 3/1/11 11/17/1012/15/101/11/11 2/7/11 11/18/1012/16/101/12/11 2/8/11 11/19/1012/17/101/13/11 2/10/11 11/22/1012/20/101/14/11 2/9/11 11/23/1012/21/101/18/11 11/24/1012/22/101/19/11 12/9/10 Separate Account: Dodge & Cox Balanced Category Moderate Allocation Asset Allocation Cash US Stock Non US Stock Bond Other Investment Style 4 Large Blend Total Assets $19.7 billion Price/Earnings 0.08 Assets in Top 10 Holdings 25.05% Turnover Ratio 12 –100 –50 0 50 100 This venerable strategy took its lumps in the October 2007-March 2009 bear market, but its managers have since made a lot of good moves. After riding the rebound of some of the holdings that cratered in the bear, the managers began shifting into what they believe to be underappreciated blue chips. That includes a number of health-care firms, such as recent purchase Amgen AMGN. They’ve also scooped up former tech favorites that have 300000 gone nowhere over the past decade, such as Nokia NOK. And generally speaking, they’ve 200000 favored equities over bonds in this low-yield environment; what bonds they do own tend to 100000 have short durations to limit the damage if interest rates rise as expected. Greg Carlson 0 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 11/1/1011/23/1012/21/101/19/112/10/11 11/2/1011/24/1012/22/101/20/112/11/11 11/3/1011/26/1012/23/101/21/112/14/11 11/4/1011/29/1012/27/101/24/112/15/11 11/5/1011/30/1012/28/101/25/112/16/11 11/8/1012/1/10 12/29/101/26/112/17/11 11/9/1012/2/10 12/30/101/27/112/18/11 11/10/1012/8/1012/31/101/28/112/22/11 11/11/1012/9/101/3/11 1/31/112/23/11 11/12/1012/10/101/7/11 2/1/11 2/24/11 11/15/1012/13/101/10/112/2/11 2/25/11 11/16/1012/14/101/11/112/3/11 2/28/11 11/17/1012/15/101/12/112/4/11 3/1/11 11/18/1012/16/101/13/112/7/11 11/19/1012/17/101/14/112/8/11 11/22/1012/20/101/18/112/9/11 12/3/10 1/4/11 12/6/10 1/5/11 12/7/10 1/6/11 22 Morningstar Advisor June/July 2011

Table of Contents for the Digital Edition of Morningstar Advisor - June/July 2011

Morningstar Advisor - June/July 2011
Contents
Contributors
Letter From the Editor
Questions for the Secret Society
Are 529 Plans a Useful Tool for Clients’ College-Savings Goals?
Taking the Lead
How to Sell Covered Calls
The College-Savings Challenge
Time to Play Defense?
Four Picks for the Present
Investment Briefs
Careful What You Wish For
Caution in Utilities After Japan Crisis
Blossoms and Thorns in the 529 Garden
Lower Fees, Competitive Returns Help More 529s Make the Grade
Morningstar Grades 529 Plans
529 Risks Include the Political
Researching 529 Plans Made Easy
How Closed-End Funds Are Born
Boutique Within a Bank
The Inefficient Pricing of Moats
More Steak Than Sizzle
Mutual Fund Analyst Picks
50 Most Popular ETFs
Undervalued Stocks With Wide Moats
The Dangers of Demonizing

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