Morningstar Magazine - June/July 2017 - 27

TRENDS

A Winning Equity
Fund Loses Assets

American Funds Growth Fund of America: Growth of $10K vs. Cumulative Net Outflows

Growth of $10K

Shareholders who invested $10,000 in American
Funds Growth Fund of America AGTHX five
years ago and stayed put through April 30 nearly
doubled their money. Yet investors pulled
more than $50 billion from the fund. This is a
dramatic illustration of a broader trend. Over the
past year, even equity funds that beat their
benchmarks have lost assets. Perhaps the trend
is turning: In April, Growth Fund of America saw
net inflows for the first time in seven years.

of antidumping and countervailing duties and
violations of trade and customs laws, and
an April 18 executive order reiterating the faithful
execution of "buy American" and "hire American"
policies. Depending on how they are implemented,
both of these executive orders could benefit
the U.S. steel industry. Ultimately, though, we
firmly believe that the fortunes of U.S. steelmakers
will remain closely tied to global fundamentals,
with protectionist trade policies providing
only fringe benefits. The Trump administration has
argued that regulation spawns inefficiency.
Steel purchasers undoubtedly hope that heavyhanded regulation of steel imports avoids
doing the same.
Andrew Lane is an equity analyst with Morningstar
Research Services.

Cumulative Net Outflows

20K
$

19.4

16

-20

12

-51.3

8
04/2013

04/2014

04/2015

04/2016

Source: Morningstar. Data as of 04/30/2017.

China Doesn't Make
the Grade for
Socially Responsible
Emerging-Markets ETFs
GREATER EUROPE

United Kingdom

A growing number of investors are looking to
incorporate environmental, social, and governance,
or ESG, principles into their investment portfolios,
including their emerging-markets allocations.
Arguably, ESG risk factors are higher in emerging
markets, where the quality of corporate
transparency and labor standards are lower than
in developed markets. Companies with lower

ESG standards are more vulnerable to reputational,
operational, financial and regulatory risks.

While emerging-markets ESG screens allow
investors to align their asset allocation with their
values, they also introduce large unintended
bets relative to the broad market as defined by the
MSCI Emerging Markets Index.
Currently, two exchange-traded funds in Europe
offer exposure to emerging-markets ESG-screened
companies: iShares MSCI Emerging Markets
SRI, which tracks the MSCI Emerging Markets SRI
Index, and UBS ETF MSCI Emerging Markets
SRI, which tracks the MSCI Emerging Markets
SRI 5% Issuer Capped Index. Both provide
exposure to emerging-markets firms that have
a limited negative impact on the environment;
promote diversity and have good relationships
with key stakeholders, including employees; and
have strong corporate governance. They also
Cumulative Net Outflows

20K
$

Q3
2012

Q4
2012

Q1
2013

-40
-60

04/2012

Growth of $10K

Q2
2012

0M
$

19.4

0M
$

18

-10

16

-20

14

-30

Q2

122013
10
8

Q3
2013

Q4
2013

Q1
2014

Q2
2014

Q3
2014

-40
-51.3

-50
27
-60



Table of Contents for the Digital Edition of Morningstar Magazine - June/July 2017

Contents
Morningstar Magazine - June/July 2017 - Cover1
Morningstar Magazine - June/July 2017 - Cover2
Morningstar Magazine - June/July 2017 - 1
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Morningstar Magazine - June/July 2017 - Contents
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