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Investing Specialists

Morningstar Runs the Numbers

We take a numerical look through this week's Morningstar research. Plus, our most popular articles and videos for the week ended Dec. 1.

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Inspired by Harper's Index (with a tip of the hat to FiveThirtyEight's Significant Digits blog), Morningstar Runs the Numbers uses a numbers-based approach to highlight recent Morningstar research, along with some outside news stories.

Emerging markets have staged a strong recovery so far in 2017, but investors had to endure a long, painful slog prior to that. Director of global ETF research Ben Johnson dispels three myths about investing in emerging-markets stocks.

In 2016, investors paid an asset-weighted average of 1.34% for alternative mutual funds (which includes open-end funds and exchange-traded funds), which was significantly higher than the asset-weighted average of 0.72% for balanced funds, 0.50% for U.S. equity funds, and 0.48% for taxable-bond funds. Even more notable, despite their higher fees, alternative funds were the only group of funds to exhibit rising costs to investors, writes senior manager research analyst Patricia Oey.

Two people showed up for work believing each was acting director of the Consumer Financial Protection Bureau, the nation's top financial watchdog agency. Tuesday, a federal judge ruled that President Donald Trump's appointee, director of the Office of Management and Budget Mick Mulvaney, would serve as acting head rather than Obama-administration holdover Leandra English, The New York Times reported.

“Mick Mulvaney, the acting director of the Consumer Financial Protection Bureau, brought in doughnuts for employees. Around the same time, Leandra English, the agency's other acting director, sent an all-staff email thanking the work force for its service. Awkward.”

Oil sands production faces challenged economics and struggles to compete with other marginal sources of supply, such as U.S. shale, says equity analyst Joe Gemino. Fortunately for oil sands producers, Gemino believes technology will help oil sands production compete by meaningfully reducing both operating costs and capital costs, coupled with increases in oil quality and field recovery rates. See his two top picks in the Canadian energy sector

Rising yields mean losses for bond portfolios, at least in the short run, which is unsettling for those looking to meet a near-term goal, says Sarah Bush, director of North American fixed-income manager research. Still, she says, it's important not to lose sight of the important diversification benefits that bonds can offer, especially in the event of an equities sell-off.

“The S&P 500 fell 8.4% between August and September 2015, its biggest drawdown in the past five years. On average, funds in the intermediate-term government category posted a modest positive gain.”

We recently broke our U.S. equity coverage down to see which of the 11 equity sectors have the greatest concentrations of companies with wide and narrow moats. Industrials has the most wide-moat names, while consumer cyclical leads with narrow moats.

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