Morningstar Advisor - April/May 2012 - (Page 20)

Investments à la Carte Four Picks for the Present Stock: Charles Schwab Corp. SCHW Fair Value Estimate $23 Morningstar Rating Uncertainty High Economic Moat Narrow Avg. Credit Quality High Market Cap $17.7 billion QQQQQ YTD Stock Price Compared With Fair Value Estimate Daily stock price Fair value estimate 30 20 10 3/7/11 (Gaps indicate when fair value estimate was under review.) 6/7/11 9/7/11 12/7/11 Charles Schwab Corp. is perhaps still best known for its discount-brokerage roots, but these days the company is about much more than just a cheap trade. Since its beginning, the firm and its eponymous founder have spread the gospel of investing across the U.S. Today, Schwab remains a potent force in personal investing, but the company has complemented its trading-fee revenue with asset-based income. We like the corporation’s strong position in the personal-investing business, which we think holds the potential for added growth as individuals will continue to turn to investing to fund their future needs. Gaston F. Ceron Mutual Fund: Artisan Global Value ARTGX Category World Stock Asset Allocation Cash US Stock Non US Stock Bond Other Investment Style 4 Large Growth Morningstar Rating QQQQQ Total Assets $103.0 million Expenses 1.50% Turnover 32.3% –100 –50 0 50 100 Run by David Samra and Dan O’Keefe, managers of the closed Artisan International Value ARTKX, this four-year-old fund has become an excellent holding as well. At each fund, the duo will hold companies of all sizes that trade at significant discounts to their estimated private market values yet have decent balance sheets and growth prospects. They run concentrated portfolios of 40–50 stocks and hold their picks for years. The result has been superb returns and muted volatility. Lately, the managers have moved further up the quality spectrum to take advantage of their relatively modest valuations. This fund has beaten 90% of its world-stock peers since its December 2007 launch. Greg Carlson 30 20 5/10/10 9/10/10 1/10/11 Separate Account: Harris Associates Equity & Income 10 Category Moderate Allocation Asset Allocation Cash US Stock Non US Stock Bond Other Total Number of Holdings 109 Morningstar Rating QQQQ P/B Ratio 2.37 Assets in Top 10 Holdings 30.38% Average Turnover Ratio 40% 0 3/10/115/2/116/20/118/11/1110/4/1111/29/1 3/7/114/25/116/16/118/4/119/22/1111/17/111 3/11/115/3/116/21/118/12/1110/10/1112/5/1 3/8/114/26/116/17/118/10/1110/3/1111/28/1/ 3/14/115/4/116/22/118/15/1110/11/1112/6/1 3/9/114/27/11 6/23/118/16/1110/12/1112/12 3/15/115/10/11 7/1/118/19/1110/17/1112/15 3/16/115/5/116/24/118/17/1110/13/1112/13 3/17/115/11/11 7/5/118/22/1110/18/1112/16 3/18/115/6/116/27/118/18/1110/14/1112/14 3/21/115/12/11 7/11/118/31/1110/27/1112/ 3/22/115/13/117/6/118/23/1110/19/1112/19 3/23/115/16/117/12/11 9/1/1110/25/1112/2 3/24/115/17/117/7/118/24/1110/20/1112/2 3/25/115/18/117/13/11 9/2/1110/26/11 12/ 3/28/115/19/117/8/118/25/1110/21/1112/2 3/29/115/20/117/14/11 9/6/1110/28/11 11 3/30/115/23/117/15/11 9/12/1111/2/11 1 3/31/115/24/117/18/119/7/1110/31/11 4/1/11 5/25/117/19/119/13/1111/3/11 4/4/11 5/26/117/20/119/8/11 11/1/11 4/5/11 5/27/117/21/119/14/1111/4/11 4/11/116/1/117/22/119/9/11 11/10/11 4/6/11 5/31/117/25/119/15/1111/7/11 4/12/116/2/11 7/26/119/16/1111/11/11 4/7/11 6/3/11 7/27/119/19/1111/14/11 4/13/116/6/11 7/28/119/20/1111/15/11 4/8/11 6/10/118/1/119/21/1111/16/11 4/14/116/7/11 7/29/119/23/1111/18/11 4/15/116/13/118/2/11 9/26/1111/21/11 4/18/116/8/11 8/3/11 9/27/1111/22/11 4/19/116/14/11 8/5/11 9/28/1111/23/11 4/20/116/9/11 8/8/11 9/29/1111/24/11 4/21/116/15/11 8/9/11 9/30/1111/25/1 4/28/11 6/28/11 8/26/1110/24/11 4/29/11 6/29/11 8/29/11 11/8/11 5/9/11 6/30/11 8/30/11 11/9/11 10/5/1111/30/1 10/6/11 12/1/1 10/7/11 12/2/1 12/7/1 12/8/ 12/9/ –100 –50 0 50 100 Comanager Ed Studzinski recently retired after 12 years on board, but Clyde McGregor has run this strategy for more than 16 years, so it shouldn’t lose a step. He’s a wide-ranging value investor who buys firms at steep discounts but is willing to own growth stocks when they look cheap. The equity slice of the portfolio is capped at 75% of assets, and the remainder goes into highly rated government bonds. While the latter stake can be a drag when Treasuries trail lower-rated debt, McGregor has posted very strong risk-adjusted returns over the long haul. Greg Carlson 20 Morningstar Advisor April/May 2012

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

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