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Five Funds Receive New Rating

Five recent ratings.

Russell Kinnel, 10/22/2013

Although we spend most of our time updating the Morningstar Analyst Ratings of funds we’ve already rated, we continue to add funds to our ratings universe. Some of these funds are relatively new, while others have been around for a long time. We don’t have any rules regarding at what level a fund must start; we just rate them where we think they fit. Here are five recent ratings.

Fidelity Real Estate Investment FRESX earned a Morningstar Analyst Rating of Bronze. It’s a nice straightforward play on real estate investment trusts. Its 55-stock portfolio makes it one of the more diffuse funds in the category as there just aren’t that many REITs out there. So, you can find some bolder, more-concentrated funds than this one. However, Steve Buller has done a fine job executing this modest strategy. The fund has outperformed the category average by a range of 42–277 basis points in each calendar year since 2007, when it last underperformed.

DFA International Small Company DFISX is rated Silver because it is right in DFA’s wheelhouse. This fund delivers excellent small-cap passive exposure by tracking a savvy approach to trading less-liquid names. The fund charges 0.56%, making it one of the cheapest funds in the category.

RS Value RSVAX earns a Neutral rating because it is in the process of overhauling its strategy. Its portfolio is the result of industry specialists selecting stocks in their area, and RS has realized it needs overall portfolio oversight to avoid unintended bets if, for example, everyone picks economically sensitive stocks or raises cash.

Vanguard FTSE All-World ex-US SmallCap VFSVX is rated Silver, though it’s a newcomer with just three years under its belt. Your choice for foreign small-cap passive funds really comes down to this one versus the aforementioned DFA fund. This fund charges 0.45%, which is 11 basis points less than the DFA fund.

Vanguard Strategic Equity VSEQX merits a Neutral rating because our enthusiasm for Vanguard’s quantitative group is rather tepid. The fund uses quantitative models that emphasize high profitability and low valuations.


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