Morningstar Advisor - August/September 2012 - (Page 20)

Investments à la Carte Four Picks for the Present Exchange-Traded Fund: iShares MSCI EAFE Minimum Volatility EFAV Morningstar Category Foreign Large Value Expense Ratio 0.2% iShares MSCI EAFE MSCI EAFE NR AUM $50.8 million YTD Return 3.84% YTD MSCI EAFE Return 2.96% Avg. Daily Volume 11,589 $12K 10 10/11 12/11 02/12 04/12 06/12 Those sickening lurches in the markets when Europe looks ready to fly apart probably won’t go away anytime soon. But bunkering in cash is a questionable move. A good compromise is to dial down volatility by picking the highest-quality, sturdiest stocks. That’s what iShares MSCI EAFE Minimum Volatility tries to achieve. Every six months, it selects a low-volatility basket of stocks, while keeping its sector- and country- level weights as close as possible to those of the MSCI EAFE. The index’s back-tests indicate that the strategy, had it existed, would have exhibited a beta of 0.65, meaning for every one percentage point the EAFE moves, the minimum volatility version moves 0.65 percentage points. With only about $50 million in assets, this less-liquid ETF is for experienced and patient ETF investors only. Samuel Lee Mutual Fund: Berwyn Income BERIX Category Conservative Allocation Asset Allocation Cash US Stock Non US Stock Bond Other Investment Style 2 Mid Value Morningstar Rating Morningstar Analyst Rating QQQQQ Expenses 0.65% Total Assets $1.5 billion –100 –50 0 50 100 Feeling nervous about the valuations of equities after their recent surge, but still want some exposure? This fund puts no more than 30% of its assets in stocks, with the rest going into bonds and cash. Run by a veteran value shop, the fund owns cheap companies of all sizes with decent balance sheets in its equity slice. On the fixed-income side, the team plays to its strength (company analysis) by owning a healthy slug of midgrade and high-yield corporate debt. The fund will own Treasuries when the team sees value in them, but it owns none at the moment. Greg Carlson Separate Account: Artisan International Growth Trust Category 4 Large Blend Asset Allocation Cash US Stock Non US Stock Bond Other Investment Style 7 Large Growth Morningstar Rating QQQQQ Minimun Investment NA Number of Holdings 75 Total Assets $17.6 billion –100 –50 0 50 100 Although this separate account’s record is just a few years in length, lead manager Mark Yockey has successfully employed the same strategy in a mutual fund format for more than 22 years. He ran Waddell & Reed International Growth UNCGX from 1990 to 1996 and Artisan International ARTIX since then. Yockey primarily invests in large firms with solid growth potential yet relatively modest valuations, although he will also buy higher-priced fast growers and scoop up value plays at times. Lately, he’s owned a mix of very stable growers in developed markets and a smattering of emerging-markets names, which has led to excellent relative returns. Greg Carlson 20 Morningstar Advisor August/September 2012

Table of Contents for the Digital Edition of Morningstar Advisor - August/September 2012

Morningstar Advisor - August/September 2012
Letter From the Editor
How Much of the Behavior Gap Is Your Fault?
What’s Your View of the Muni-Bond Market?
A Balanced Life
How to Get to Know EMMA
A Strong, Robust Fund Business
Dividend Investing Abroad
Four Picks for the Present
Investment Briefs
Fund Expenses Through the Decades
Autos on Comeback Track
Lessons From the Muni-Bond Rebound
Municipal-Bond Landscape Shifts
Municipal Bonds 101
A Tale of Two Cities
Unraveling the Mysteries of Money
Small Companies Mean the World to Him
The Chinese Art Market and the Origin of Bubbles
The Myth of the Dumb Investor
Stocks That Can Stand the Heat
Our Favorite Mutual Funds
50 Most Popular ETFs
Undervalued Stocks With Wide Moats
The War on Savers

Morningstar Advisor - August/September 2012