3 New(ish) Gold-Rated Funds
These funds all earned our top fund analyst rating in the past few months.
Susan Dziubinski: Hi. I'm Susan Dziubinski from Morningstar.com. It isn't easy for a fund to earn our top Morningstar fund analyst rating of Gold. Funds that do so are best in breed, models in their respective categories. In fact, fewer than 200 funds across dozens of fund categories earn Gold ratings. Here are three funds that recently joined the Gold-rated fund club.
Adam McCullough: Fidelity Extended Market Index is a great option for investors looking to round out a large-cap equity position. This fund invests in nearly all investable U.S. stocks outside of the S&P 500. That means that it does own small- and micro-cap stocks even though it lands in Morningstar's mid-cap blend equity category. Because it does own smaller cap and micro-cap stocks this fund also carries a little bit more risk than the average fund in the mid-blend category. It's broad diversification should help in mitigate risks of single stock or sector exposures. Also, this fund is the cheapest of its kind. It only charges 5 basis points per year which is much lower than the mid-cap blend fee average. All said, this fund earns a Morningstar Analyst Rating of Gold because it's cheap, broadly diversified, and has a soundly constructed index.
Eric Jacobson: Things turned out a lot better than many people expected after PIMCO legend Bill Gross stepped down from that firm and Gold-rated Harbor Bond in late 2014. Gross had built a powerhouse organization full of top-notch managers and analysts, though, very few of whom followed him out the door and several of whom had already either been candidates or winners of Morningstar's Manager of the Year award. When Gross left, the firm appointed three of those managers to run its total return strategies, including this one, and made PIMCO Income manager Dan Iveson chief investment officer. Scott Mather, Mark Kissel, and Mihir Worah had been running the funds since Gross left. Like most of their peers they've stumbled here and there, but have otherwise produced very good record. They've done it with standard PIMCO methods, which include developing macro decisions in the firm's investment committee. The funds' managers then looked to PIMCO's vast fundamental research team, which covers just about every security type, sector, and geography. They put those inputs together to fill out their total return-style portfolios. That last part is notable because the team runs this portfolio for Harbor right along with PIMCO's flagship total return fund. The biggest difference is the Total Return offers institutional shares that are a little cheaper than Harbor Bond's but which you can only purchase if you've got at least a million dollars to put to work or can access through a third-party advisor or 401(k) plan. For the rest of us, Harbor Bond's thousand-dollar minimum, no-load shares are a great option.
Kevin McDevitt: Big changes have come for Artisan Global Value. The management team has been separated between Dan O'Keefe and David Samra. Those two have been managing both Artisan Global Value and Artisan International Value together for years, but the two are splitting. They will run two separate teams, one for Global Value, one for International Value, and in the case of Global Value, that team will now be led by Dan O'Keefe. This change was made for a variety of reasons. One was because I think the team was worried about retaining talent, losing senior analysts that had been with them for years. Really this was a chance to provide promotion opportunities for some of their top analysts. In this case that is Justin Bandy and Michael McKinnon who have become comanagers on the fund.
Also David Samra and Dan O'Keefe have formed separate legal entities as well. This creates far more flexibility in terms of how they can manage their funds; that is there are no restrictions on how big their positions can be, or at least there are far fewer restrictions in how big an individual stock position can be since these two portfolios are now completely divided legally. Really it comes back to them, an opportunity to both have more independence, have more flexibility in terms of how they invest, and finally the opportunity to promote some senior personnel. Hopefully that will lead to continuity down the road for this Gold-rated fund, Artisan Global Value.
Eric Jacobson does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.