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3 Upgraded Funds for the Long Haul

3 Upgraded Funds for the Long Haul

Morningstar analysts are constantly evaluating mutual funds for signs that the fundamentals have changed. When they do, we’ll change our rating. Recently, we upgraded three funds based on these fundamental changes.

Vanguard Global Wellesley is a global version of the hugely successful income-driven Vanguard Wellesley Income. Launched in 2017, we've been gradually warming up to it. We upgraded the fund's Process to Above Average, taking the fund's overall rating to Silver. The fund puts 65% of assets in bonds and 35% in dividend-paying stocks. That's a rich target environment for investments around the world, but some funds with that mandate take on too much risk by chasing the highest-yielding stocks and bonds. Wellington does a good job of researching fundamentals to avoid blowups, in either the stocks or the bonds.

3 Upgraded Funds

These funds earn Morningstar Analyst Ratings of Bronze or Silver.

  1. Vanguard Global Wellesley Income VGYAX
  2. Fidelity Puritan FPURX
  3. Merger Fund MERFX

Fidelity Puritan is a conventional balanced fund with a solid team behind it. Lead manager Dan Kelley is four years into the job, and we've been sufficiently impressed to raise the People rating to Above Average and the overall rating to Bronze. The fund matches a growth portfolio with a fairly cautious bond portfolio to produce a fairly moderate overall risk/reward profile, by growth standards anyway. Kelley has been a solid stock-picker, and Fidelity's bond crew has been skilled as well.

We upgraded Merger Fund from Neutral to Bronze, and it's an appealing strategy for bear markets. The fund conducts merger arbitrage in which it seeks to profit from mergers going through at the agreed price or higher. They buy the target and short the buyer in order to limit market exposure. It's a relatively low-return/low-risk strategy, but that has appeal in down markets. The fund is only down half a percent in 2022, for instance.

Watch 3 Short-Term Bond Funds to Calm Interest-Rate Jitters from Russ Kinnel.

The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.

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About the Author

Russel Kinnel

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Russel Kinnel is director of ratings, manager research, for Morningstar Research Services LLC, a wholly owned subsidiary of Morningstar, Inc. He heads the North American Medalist Rating Committee, which vets the Morningstar Medalist Rating™ for funds. He is the editor of Morningstar FundInvestor, a monthly newsletter, and has published a number of prominent studies of the fund industry covering subjects such as manager investment, expenses, and investor returns.

Since joining Morningstar in 1994, Kinnel has analyzed virtually every type of fund and has covered the most prominent fund families, including Fidelity, T. Rowe Price, and Vanguard. He has led studies on the predictive power of fund data and helped develop the Morningstar Rating for funds and the Morningstar Style Box methodology. He was co-author of the company's first book, Morningstar Guide to Mutual Funds: 5-Star Strategies for Success (Wiley, 2003), and was author of the book Fund Spy: Morningstar's Inside Secrets to Selecting Mutual Funds That Outperform, published in 2009.

Kinnel holds a bachelor's degree in economics and journalism from the University of Wisconsin.

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