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Morningstar Fund Analyst Picks' Batting Average Improves

We've improved in four of five broad asset classes since 2007.

Russel Kinnel, 09/01/2010

In FundInvestor, we've been reporting on the performance of our Morningstar Fund Analyst Picks since June 2007 using data that goes back to the beginning of our picks in 1999. In the Morningstar FundInvestor newsletter each month, we tell you how the picks in a category or two have done and how the picks as a whole have done. Click here for some recent data.

I want to take a step back to see how those things have changed and how we calculate the performance.

Batting Average
The batting averages tell you what percentage of our picks have outperformed their peers over the trailing five years. We weight the figure based upon how long a fund was a pick in that time period. If one fund was a pick for all 60 months and another was there for 30 months, then the first fund gets twice the weighting of the second.

Looking back at the figures we published in June 2007, our record has improved in four out of five broad asset classes (domestic equity, international equity, taxable bond, municipal bond, and balanced). Our balanced-fund batting average has moved to 86% from 80%. Two of our top performers have been Vanguard Wellington VWELX and Vanguard Wellesley Income VWINX. When you have excellent management and low costs, good things tend to happen.

U.S. equity has bumped up to 64% from 60% thanks to strong performance from the likes of Fairholme FAIRX (picked in 2005) and Primecap Odyssey Aggressive Growth POAGX (2006).  Vanguard Growth Equity VGEQX (2000) was one of our weakest performers--we removed it in 2008.PAGEBREAK

Slumps and Rally Caps
International equity is the one spot where our record has deteriorated, as the batting average has fallen to 62% from 70%. Mutual Quest TEQIX has its detractors, but we like its conservative approach and stock-selection abilities. On the plus side, Matthews Pacific Tiger MAPTX (1999) has been a big winner.

Our municipal-bond batting average has surged to 96% from 88%. Among our many muni successes are Fidelity Municipal Income FHIGX (1999) and T. Rowe Price Tax-Free Short-Intermediate PRFSX (2000).

Our taxable-bond batting average has enjoyed a solid uptick, rising to 84% from 63%. One big contributor has been Fidelity Floating Rate High Income FFRHX. We picked it for its conservative strategy and strong research, but initially it was well behind its category peers. However, it stood up brilliantly in 2008 and now has the best record in the bank-loan category.

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