3 Good Funds Having a Lousy Year
These Morningstar Medalists' returns are near the bottom of their categories this year.
We assign high Morningstar Analyst Ratings to strategies that we think will outperform a relevant index, or most peers, over a market cycle. But that doesn't mean there won't be some dry spells along the way. Today we're looking at three highly rated funds that are struggling this year.
Oakmark Select is one of the worst performers in Morningstar's large-blend category in 2020. Katie Reichart, who covers the fund, points out that because the fund concentrates in about 20 companies, investors must be comfortable with boom-and-bust returns--and this year's returns qualify as a bust. Although the portfolio has its share of winners this year--including Netflix and Facebook--its returns are being dragged down by horrible performance from its sizable stake in financials. Although we think Oakmark Select will see better days again, it requires a heavy dose of patience.
Fidelity Advisor Growth & Income's returns also land near the bottom of the large-blend category. The fund's overweight positions in energy, industrials, and financials have stung. Management embraces out-of-favor or fundamentally challenged companies and avoids firms that have been bid up by market mania. Robby Greengold, who covers the fund for Morningstar, points out that the management's discipline has rewarded patient investors over time.
Lastly, one of our favorite funds in Morningstar's large-growth category, Primecap Odyssey Growth, is struggling relative to its peers. The managers are benchmark-agnostic, favoring companies that they think have above-average growth potential when those prospects are still emerging, largely overlooked, or clouded by controversy. As such, the fund lacks significant exposure to the mega-cap tech names driving so many other large-growth funds. Alec Lucas, who covers the fund for Morningstar, says that the managers have a tolerance for volatility. Investors who own the fund need the same.
Morningstar does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.