Morningstar Advisor - October/November 2012 - (Page 6)

Contributors MorningstarAdvisor Editor-in-Chief Jerry Kerns Editor-at-Large Don Phillips Contributing Editors Dan Culloton, Paul Justice, Haywood Kelly Contributors David Blanchett, Michael Brennan, Greg Carlson, Peng Chen, Damien Conover, Philip Guziec, Roger G. Ibbotson, Thomas M. Idzorek, Maciej Kowara, David Krempa, Samuel Lee, Gideon Magnus, Alex Morozov, Steven Pikelny, Jeffrey Ptak, Michael Rawson, Kate Rushkewicz Reichart, Carl Richards, Swami Shanmugasundaram, James X. Xiong, Vincent Yu, Shannon Zimmerman Data Editors Mnason Chew, Preethi Parmar, Alina Tarlea Proofreader Jennifer Gierat Art Director Alexander Skoirchet Illustrator Christian Montenegro Photographer Bryan Regan Christian Montenegro Christian Montenegro recalled his student days when he approached illustrating factor investing for this issue. “I was inspired by my memory of scientific graphics from my physical school books,” he says. Montenegro grew up in Buenos Aires, where he says he studied comics and graphic design. He uses elements of both in his illustrations, which have appeared in countries all around the world. Katie Rushkewicz Reichart Writing this issue’s Undiscovered Manager profile (“Clients Have a Friend in Luther King,” Page 58) taught senior fund analyst Katie Reichart one important lesson: Don’t visit Texas in late June! Despite the triple-digit heat, the trip to meet Luther King proved valuable. “In an industry so focused on asset gathering, it’s inspiring to encounter a manager who cares more about serving fund investors than padding his own pocket.” Publisher Leslie Banks Director of Advertising Sales Mary Uribe Regional Sales Directors Dan Atkinson, Tony Lignelli, Kristina Niemi, Stuart Roge Morningstar, Inc. Chairman and CEO Joe Mansueto President, Equity and Credit Research Group Catherine Odelbo Sr. Vice President, Financial Communications Business Mike Barad Managing Director, Design David Williams How to Reach Morningstar Advisor Subscriber Services and Circulation Editorial and Letters to the Editor James X. Xiong James X. Xiong hopes that the Gray Matters article he co-wrote (“Less-Liquid Holdings Mean More-Solid Results,” Page 62) provides a service not only to advisors but also to mutual fund managers. “The liquidity premium exists in mutual funds,” says Xiong, a researcher for Morningstar Investment Management. “One reason we think it might is because during down markets, managers of highly liquid holdings are more likely to trade. I hope our research discourages unnecessary trading.” Advertising Rate card available at Reprints and Licensing How to Reach Morningstar Customer Service +1 312 384-4000 Advisor Product Sales +1 877 586-5405 Data Questions +1 312 696-6600 Morningstar Advisor is published bimonthly by Morningstar, Inc., 22 W. Washington St., Chicago, IL 60602. An annual subscription for delivery in the U.S. is $60. All exhibit data in this magazine is provided by Morningstar and Ibbotson Associates unless otherwise noted. © 2012 Morningstar. All Rights Reserved. The information contained herein: (1) is intended solely for informational purposes; (2) is proprietary to Morningstar and/or its content providers; (3) may not be copied or distributed; (4) is not warranted to be accurate, complete, or timely; and (5) does not constitute investment advice of any kind. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results. “Morningstar” and the Morningstar logo are registered marks of Morningstar, Inc. Disclosure: Morningstar licenses its indexes to certain providers, including Blackrock Institutional Trust Company, N.A., First Trust, and Deutsche Bank, for use in exchange-traded funds and exchange-traded notes. These ETFs and ETNs are not sponsored, endorsed, issued, or sold by Morningstar. Morningstar does not make any representation regarding the advisability of investing in ETFs and ETNs that are based on Morningstar indexes. Shannon Zimmerman To fundamental investor and fund analyst Shannon Zimmerman, momentum investing has always been a head-scratcher. Why should a stock’s price rise in the future simply because it has risen in the past? “Many investors probably feel that way, which is why I wrote about the tactic,” Zimmerman says (“Big Mo,” Page 46). “The track record is remarkable. Rejecting momentum out of hand because it seems counterintuitive might also mean rejecting higher returns.” 1231486 6 Morningstar Advisor October/November 2012

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

Morningstar Advisor - October/November 2012
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