Morningstar Advisor - October/November 2012 - (Page 20)

Investments à la Carte Four Picks for the Present Stock: Wipro WIT Fair Value Estimate $13 Morningstar Rating Uncertainty Medium Economic Moat Narrow Avg. Credit Quality — Market Cap $20.2 billion QQQQQ YTD Stock Price Compared With Fair Value Estimate $14K 12 10 8 1/2/12 3/2/12 Daily stock price Fair value estimate (Gaps indicate when fair value estimate was under review.) 5/2/12 7/2/12 Wipro, one of the largest India-based global IT services providers, stands out from its peers thanks to its unique revenue and market mix. Its IT services business, which accounts for nearly 75% of total revenue, has built a niche in some emerging services, which should help the company stay ahead of the competition. Given its wide range of service offerings and its global reach, we think Wipro is poised for a Fair Value - Daily solid run over the long term. The company ranks among the top four offshore IT service providers, with a differentiated service offering, including emerging services such as infrastructure management and testing. Wipro’s early lead in these services is significant, in our opinion, as these are high-growth businesses that have yet to be penetrated by other Indian companies. Swami Shanmugasundaram 14 Daily Closing 12 Mutual Fund: Fidelity Dividend Growth FDGFX Price 10 Category 4 Large Blend 8 Investment Style 7 Large Growth Morningstar Rating Morningstar Analyst Rating Expenses 0.93% QQ 14 Total Assets $7.3 billion 12 Asset Allocation 6 1/2/122/1/123/1/124/2/125/1/12 6/1/127/2/128/1/12 1/3/122/2/123/2/124/3/125/2/12 6/4/127/3/128/2/12 1/4/122/3/123/5/124/4/125/3/12 6/5/127/4/128/3/12 1/5/122/6/123/6/124/5/125/4/12 6/6/127/5/128/6/12 1/10/122/15/123/22/124/27/12 6/11/127/17/128/22/12 1/6/122/7/123/7/124/10/125/16/126/21/127/27/12 1/11/122/16/123/23/124/30/12 6/7/127/10/128/15/12 1/9/122/10/123/19/124/24/125/30/12 7/6/128/7/12 1/12/122/17/123/26/12 5/7/12 6/12/127/18/128/23/12 1/13/122/20/123/27/12 5/10/126/15/127/23/128/28/12 1/16/122/21/123/28/12 5/8/12 6/8/127/11/128/16/12 1/17/122/22/123/29/12 5/11/126/18/127/24/128/29/12 1/18/122/23/123/30/12 5/9/12 6/13/127/19/128/24/12 1/19/122/24/12 4/6/12 5/14/126/19/127/25/128/30/12 1/20/122/27/12 4/11/125/17/126/22/127/30/12 1/23/122/28/12 4/9/12 5/15/126/20/127/26/128/31/12 1/24/122/29/12 4/12/125/18/126/25/127/31/12 1/25/12 3/12/124/17/125/23/126/28/12 8/10/12 1/26/12 3/8/12 4/13/125/21/126/26/12 8/8/12 1/27/12 3/13/124/18/125/24/126/29/12 8/13/12 1/30/12 3/9/12 4/16/125/22/126/27/12 8/9/12 1/31/12 3/14/124/19/125/25/12 7/9/12 8/14/12 2/8/12 3/15/12Cash 2/13/123/20/124/25/125/31/12 7/12/128/17/12 2/9/12 3/16/124/23/125/29/12 7/13/128/20/12 2/14/123/21/124/26/12 6/14/127/20/128/27/12 4/20/125/28/12 7/16/128/21/12 US Stock Non US Stock Bond Other –100 –50 0 50 100 Larry Rakers transformed this fund into a broadly diversified, all-cap vehicle (from a mega-cap-focused, top-heavy portfolio) when he took over in late 2008. Dividend-seekers should look elsewhere; this fund yields less than the S&P 500 (and usually has). But Rakers has proved to be a savvy stock-picker in the more than 10 years he’s managed diversified 10 equity funds at Fidelity. And while Rakers’ preference for economically sensitive 8 companies will fall out of favor at times, 6 1/2/122/1/123/1/12 4/3/125/2/12 6/4/127/ 1/3/12 2/3/123/5/124/4/125/3/12 6/5/127 1/4/12 2/6/123/6/124/5/125/4/12 6/6/127 1/5/12 2/7/123/7/124/10/125/16/126/21 1/10/122/15/123/22/124/26/12 6/11/17 1/6/12 2/10/123/19/124/23/125/29/12 1/11/122/16/123/23/124/30/12 6/7/12 1/9/122/8/123/12/124/16/125/22/126/2 1/12/122/17/123/26/12 5/7/12 6/12/1 1/13/122/20/123/27/12 5/10/126/15/1 1/16/122/21/123/28/12 5/8/12 6/8/12 1/17/122/22/123/29/12 5/11/126/18/ 1/18/122/23/123/30/12 5/9/12 6/13/1 1/19/122/24/12 4/6/12 5/14/126/19/ 1/20/122/27/12 4/11/125/17/126/22 1/23/122/28/12 4/9/12 5/15/126/20 1/24/122/29/12 4/12/125/18/126/25 1/25/12 3/8/12 4/13/125/21/126/26 1/26/12 3/13/124/17/125/23/126/2 1/27/12 3/9/12 4/18/125/24/126/2 1/30/12 3/14/124/19/125/25/12 1/31/12 3/15/124/20/125/28/12 2/13/123/20/124/24/125/30/12 2/9/12 3/16/12 4/25/125/31/12 2/14/123/21/12 4/27/12 6/14/1 investors’ current flight to big, steady2/2/123/2/124/2/125/1/12 6/1/127/7 growers makes the fund an appealing contrarian play. Greg Carlson Separate Account: Northern Cross EAFE Equity Category 4 Large Blend Asset Allocation Cash US Stock Non US Stock Bond Other Investment Style 7 Large Growth Morningstar Rating QQQQ Minimum Investment $250 million Number of Holdings 63 Total Assets $37.1 billion –100 –50 0 50 100 The team that manages Harbor International HAINX plies an identical strategy here. It generally looks for high-quality firms (with steady revenues and good balance sheets) that are trading relatively cheaply. The team tries to anticipate long-term structural shifts that will affect industry pricing power and competitive advantages. Its approach can lead to volatility, but management has protected capital better than most competitors on the downside and the account and the fund have been reliable performers from year to year as well as over the long haul. Former lead manager Hakan Castegren died two years ago, but the four remaining managers have worked on the strategy for 10 to 27 years. Greg Carlson 20 Morningstar Advisor October/November 2012

Table of Contents for the Digital Edition of Morningstar Advisor - October/November 2012

Morningstar Advisor - October/November 2012
Contents
Contributors
Letter From the Editor
Ill Communication
Do You Use Factor-Investing Strategies?
Practicing What She Preaches
How to Determine the True Price of ETFs
The Quant Factor
Managers Dispute the Death of Equities
Investments á la Carte
Investment Briefs
Five Inconvenient Truths of Manager Research
Health Care’s Outlook Clarifies
Exploring the World of Factors
Uncloaking the Alpha Machine
Factor Strategies Gain Footholds in Practices
Big Mo
Fitting Factors Into the Formula
Clients Have a Friend in Luther King
Less-Liquid Holdings Mean More-Solid Results
Retirement-Withdrawal Strategies Quantified
Amid Turmoil, Don’t Discount Foreign Equities
Our Favorite Mutual Funds
50 Most-Popular Equity ETFs
Undervalued Stocks With Wide Moats
Should I Stay or Should I Go?

Morningstar Advisor - October/November 2012