Morningstar Runs the Numbers

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.

3 International-stock fund managers encountered favorable conditions in 2017. Most developed markets outside the United States, including the Japanese exchange and several of the larger European ones, posted good gains last year amid increased optimism about their economic and corporate prospects, writes senior manager research analyst Bill Rocco. Here Rocco discusses the three candidates for International-Stock Fund Manager of the Year.

"All three nominees took advantage of … favorable conditions and produced superior returns in 2017. But Fund Managers of the Year must be much more than one-year leaders. They need to have earned impressive long-term results. They must employ sound, distinctive, and repeatable strategies, and they and their funds must have other factors in their favor. Their funds also must have Morningstar Analyst Ratings of Silver or Gold."

4 A lot of changes to the tax code were signed into law in the final days of 2017, writes director of personal finance Christine Benz. Very few of the new tax laws have anything to do with the 2017 tax-filing season, however; your 2018 return is when you'll truly begin to see how the new tax laws affect you. But even though it's business as usual for the time being, tax day--April 17--is apt to sneak up in a hurry. Whether you use tax-preparation software or outsource your tax prep to a CPA, Benz outlines four key strategies to ensure a smooth and worry-free tax season.

6% The New York Times reports that at the moment, the 2017-2018 flu season is considered "moderately severe." Large numbers of Americans have fallen ill, but importantly, the number of people hospitalized or dying from flu nationwide is not unusually high, according to the Times.

"Almost 6 percent of all Americans seeking medical care now have flu symptoms. That is tracked by the C.D.C.'s Outpatient Influenza-like Illness Surveillance Network, to which about 2,000 doctors' offices and clinics around the country report weekly how many of their patients have fevers of at least 100 degrees plus a cough or sore throat."

3 Contrarian thinking doesn't come naturally to most investors, writes senior manager research analyst Christopher Davis. Investors typically buy what's done well recently and sell what hasn't. This behavior makes strong performers more expensive and weaker performers cheaper. But eventually, what's become too popular becomes too expensive, and what's become unpopular too cheap, and the process reverses itself. That's the idea behind our "Buy the Unloved" strategy. Davis looks at the three least-popular categories as measured by fund flows.

$38 billion Apple announced that it would pay the U.S. government $38 billion in repatriation tax. Director of technology, media, and telecom equity research Brian Colello says this amount is in line with his expectations and is maintaining Apple's $163 fair value estimate and narrow moat rating.

"If you think about Apple's $252 billion of overseas cash on-hand as of December and a 15.5% tax rate that the company has to pay on that, the $38 billion tax bill isn't particularly surprising."

20 The money management world doesn't sit still, and neither do our Morningstar Analyst Ratings, says director of manager research Russ Kinnel. We keep an eye out for changes in management, strategy, fees, parent company, and returns and update our Analyst Ratings accordingly. A fund upgrade can be based on seeing a manager gradually prove himself, or it can reflect additional research we've done that convinces us of a fund's merits, or falling expense ratios that underscore a fund's strengths. Here Kinnel lists 20 funds that grew in our esteem over 2017.

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