12 Intriguing Insights on Mutual Funds

In the past my colleagues Karen Dolan and Kunal Kapoor have shared some "shocking" fund statistics with you. Today, I thought I'd share some pretty darn interesting insights from our fund analyses. No, they aren't quite shocking, but still intriguing is good, too.

We're writing longer fund analyses that go into greater depth so that you can learn more about your fund and have a greater insight into how we came up with the Morningstar Analyst Ratings. But there's so darn much great info out there that I bet you've missed some of it. So, here are just some of the good bits you may have missed.

 

 

 Third Avenue Value's (TAVFX) new lead manager is paring risk at the fund. Ian Lapey aims to build up cash to around 10% of assets and trim the fund's huge weighting in Hong Kong real estate firms from its current 40% level. He says he likes the real estate names but doesn't want such a huge weighting.

Dan Fuss and Kathleen Gaffney are raising defenses against rising interest rates and a falling dollar at the same time. Though you might expect one to counter the other,  Loomis Sayles Bond (LSBRX) now has dialed down interest-rate sensitivity through high-yield converts and stocks. At the same time, they have boosted foreign-currency exposure to 34% of assets.

American Airlines stock had long been dumped from nearly every equity fund out there before it hit Chapter 11. But its bankruptcy filing hit muni funds harder than stock funds.  Goldman Sachs High Yield Muni (GHYAX) had 4% in American Airlines bonds, and that caused it to lose 1.3% on Nov. 29, when AMR filed. Oppenheimer Rochester National Muni (ORNAX) also lost 1.3% that day because of a bet on American.

Despite its fame for growth investing, Fidelity has at least two Graham and Doddians under its roof. New  Fidelity Overseas (FOSFX) manager Vincent Montemaggiore is a Columbia graduate influenced by the great value investors, and Chuck Myers runs  Fidelity Small Cap Value (FCPVX) in a style influenced by Benjamin Graham and Warren Buffett.

 American Funds SMALLCAP World (SMCWX) has 13 managers plus a team of analysts running a 14th sleeve. That's got to be the most sleeves from just one advisor.

Templeton managers based in the Bahamas can visit only their home countries such as the United States for limited amounts of time per year, or they could face tax implications. That would seem to put them at a disadvantage versus other fund companies running international and global stock funds as their employees can travel much more freely. Because most of their managers and analysts are American and Canadian, I would imagine this is the greatest handicap for their global funds.

Nuveen Tradewinds funds have been beset by a number of defections of managers and analysts that has really put a dent in their appeal. It has led to a Morningstar Analyst Rating of Negative for  Nuveen Tradewinds Global All-Cap . 

Since it was nicked by subprime debt in 2007,  Fidelity Mortgage Securities (FMSFX) has remained cautious of nonagency mortgages even as other mortgage funds have grown bolder. Bill Irving took the helm in 2008 and was later joined by Franco Castagliuolo in 2009. Irving has just 10% in nongovernment mortgages because he's wary of poor liquidity. In addition, the fund's 5% cap on non-investment-grade debt has kept it to the straight and narrow.

 Vanguard Capital Value's bold investing styles have made it one of the most volatile funds in large blend. In fact, it has been in the top or bottom decile of its category in each of the past five years, and currently it's in the top percentile for the year to date.

 

 

 

 

 

 

 

 

 

 

 

 

Interesting Bits of Firmwide Data 
These last can be seen in the data section from the Parent page Global Fund Report, which is available in Morningstar Direct. But I’ve gleaned some details so that even if you don't have Direct, I think you’ll find the stats quite interesting.

 

• 71% of Royce's funds are rated 4 stars. Now that's consistent!
• 90% of Russell’s fund assets are in funds where the managers have zero investment. That’s also consistent but not in a good way.
• One fourth of Invesco's managers have tenure of three years or less, but an equal percentage has tenure between 12-15 years. I guess they've got something of a tenure barbell going.

 

 

 

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