Weekly Wrap: Foreign Stock Picks, Babe Ruth's Bucks, June's Fund Flows
We recap the week on Morningstar.com and note the most popular stocks, funds, and exchange-traded funds.
|Editor's note: Read the latest on how the coronavirus is rattling the markets and what investors can do to navigate it.|
Thirty years ago this week, I began working at Morningstar. Don’t worry--I’m not going to spend this issue of Smart Investor tripping down memory lane. (However, those interested in taking a ride in the way-back machine can see what the fund industry looked like in the 1990s in this article.) Instead, I’d like to share my biggest takeaway from three decades of covering mutual funds, exchange-traded funds, and stocks, which is:
Most investors should keep things simple.
I know, that’s awfully anticlimactic. Did it really take me 30 years to figure that out? OK, maybe it really only took 25 years. But it took me a while to recognize a few things. First, the financial industry has evolved in a way that makes getting low-cost, broad exposure to various asset classes quite easy. Second, it’s important to diversify, but diversification has its limits during the accumulation stage if you have a long enough runway to needing the money. And lastly, even investing junkies can stand to benefit from simplifying their core portfolios, freeing up time they can use to invest their mad money.
You can keep things extremely simple by owning one age-appropriate target-date fund and calling it a day--target-date strategies provide exposure to U.S. stocks, international fare, and bonds (and in some cases, other asset types, too). If you’re interested in being more hands-on with your asset mix, however, you can craft a simple three-fund portfolio that will give you plenty of diversification and will likely get you where you need to go, assuming you maintain an appropriate savings rate.
To commemorate my 30-year anniversary, here are 30 (or so) building blocks you can choose from to assemble a three-fund portfolio. These funds earn Morningstar Analyst Ratings of Gold and hail from what many consider to be the three “core” Morningstar Categories of funds to use when building minimalist portfolios. (Disclosure: I own Vanguard Institutional Index Fund (VINIX).)
U.S. Large Blend: American Funds Washington Mutual (AWSHX), Fidelity 500 Index (FXAIX), Fidelity Total Market Index (FSKAX), FMI Large Cap Investor (FMIHX), iShares Core S&P Total US Stock Market ETF (ITOT), iShares Core S&P 500 ETF (IVV), iShares S&P 500 Index (WFSPX), Primecap Odyssey Stock (POSKX), Schwab Total Stock Market Index (SWTSX), Schwab S&P 500 Index (SWPPX), Schwab US Broad Market ETF (SCHB), Schwab US Large-Cap ETF (SCHX), SPDR Portfolio S&P 500 ETF (SPLG), SPRD Portfolio S&P 1500 Composite Stock Market ETF (SPTM), Vanguard Dividend Appreciation ETF (VIG), Vanguard Dividend Growth (VDIGX), Vanguard Tax-Managed Capital Appreciation (VTCIX), Vanguard Total Stock Market (VITPX)/(VTI), Vanguard S&P 500 (VINIX)/(VOO) and Vanguard Large Cap ETF (VV).
Foreign Large Blend: American Funds International Growth and Income (IGFFX), FMI International (FMIJX), iShares Core MSCI Total International Stock ETF (IXUS), Vanguard ESG International Stock ETF (VSGX), and Vanguard Total International Stock ETF (VXUS).
Intermediate Core Bond: Baird Aggregate Bond (BAGIX), Fidelity US Bond Index (FXNAX), iShares Core US Aggregate Bond ETF (AGG), SPDR Portfolio Aggregate Bond ETF SPAB, TCW Core Fixed Income (TGCFX), Vanguard Total Bond Market ETF (BND), and Western Asset Core Bond (WATFX).
Perhaps you feel your portfolio needs more than just three funds--maybe you’re in the accumulation stage and want additional exposure to smaller companies, or you’re retired and want a Treasury Inflation-Protected Securities bond fund. Or perhaps you’re fine with just three funds, but you want a bond fund that gives you some exposure to lower-quality bonds or to international debt. If that’s you, feel free to review our Top-Rated Mutual Funds and Top-Rated ETFs lists as a starting point.
Just remember: When it comes to investing, less can be more.
How Rich Was Babe Ruth?
The lesson learned by translating yesterday's dollars.
Rebalancing: What You Need to Know
How to keep your retirement assets on track.
11 Superior Foreign Stocks to Buy
These undervalued wide- and narrow-moat names were recently added to the Morningstar Global Markets ex-US Moat Focus Index.
How an Investor Helped Netflix Disclose Its ESG Performance
Investor advocate Lily Bowles’ story with Netflix is a successful one, but new restrictions on shareholder resolutions make such efforts harder to replicate.
4 Funds to Dial Down Your Risk
The markets are hot, so consider these less risky funds.
U.S. Fund Flows Set a New Record in the First Half of 2021
Interest in taxable-bond and value-equity funds continues in June.
Must-Knows About Restricted Stock
These grants can seem like mad money, but they can add up to serious money over time.
Risk, Not Volatility, Is the Real Enemy
Grant us investors the wisdom to know the difference.
Green Muni Bonds Are Blooming Slowly
What does the market for green muni bonds look like, and where is it going?
What Investors Need to Know About Low-Volatility Funds
Low volatility doesn't mean no volatility, just less.
Target-Date Deep Dive: Vanguard
This giant's target-date series remains among the best for retirement savers.
Target-Date Deep Dive: Fidelity
We unpack the differences among the firm's three target-date strategies.
Target-Date Deep Dive: T. Rowe Price
The firm has one of top teams for asset-allocation research and execution in the industry.
The Costs of Digitizing Education
Institutions and students bear the brunt, but opportunities are considerable.
5 Underperforming, and Undervalued, Stocks in Q2
These stocks struggled in the second quarter but are also trading at bargain prices.
The Promise and Peril of Ethereum, Part II
The cryptocurrency has generated massive gains at times, but extreme volatility will likely rule it out for many conventional investors.
5 Automakers Best Positioned for the Future
These companies can take advantage of rapid electric vehicle growth.
Stock Analyst Updates
IBM’s Q2 a Tale of Two Drivers; Shares Overvalued
In IBM’s second quarter, the company dealt with continued headwinds to its managed infrastructure business because of the option to now have public cloud providers manage workloads, while also benefiting from cloud tailwinds in its software and business services portfolio.
Netflix Posts Slowing Subscriber Growth in Q2
We see the new mobile games offering as a distraction at best from the core business.
J&J Posts Strong Q2 Results
The company continues to innovate across segments, adding support to its wide moat.
Verizon Bounces Back With Solid Customer Gains
The company's second quarter was the strongest in four years.
Coke Reports Blowout Quarter; Shares Fairly Valued
We plan to raise our fair value estimate to reflect time value and increased guidance.
Despite Distractions, AT&T Continues to Gain Momentum
The firm has also announced additional strategic moves this week that should benefit the business.
Solid Performance Supports Sales Growth for Roche
The strong performance was partly due to pandemic headwinds in the second quarter of 2020 creating weaker comparisons.
Liquid Alternatives Funds: Is There Any Hope?
Considering the future of a fund-industry flop.
Integrating Sustainable Investing: Assessing Current Portfolios
Morningstar provides many data points for analyzing portfolios.
How Ethical Is Automatic Enrollment in Retirement Plans?
We explore how people view the ethics of this feature.
For Women in Finance, Challenges Remain at the In-Person Workplace
Along with the networking events and conferences comes a return of workplace challenges.
Manisha Thakor: Beware of 'Junk Personal Finance'
The author and financial educator discusses how social media affects financial well-being, how women can close the wealth gap, and why young people should steer clear of individual stock trading.
How Has Portfolio Management Changed During the Global Pandemic?
David Herro, portfolio manager of Oakmark International, discusses the effects of loose fiscal and monetary policy, federal intervention, and inflation.
6 Midyear Tax-Planning Tips for Business Owners
Waiting until year-end can mean missing out on tax savings.
Morningstar.com does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.