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Morningstar
Special Report

Beat the Market Week

These durable strategies have bested the market over time.

Jason Stipp

The active versus passive investing debate is a live one, with compelling arguments and fervent acolytes on both sides of the divide. Let's be clear: This special report is not about that debate. (But for more on that, see our September 2011 special report.)

True, investors have recently taken a strong liking to index funds: In late 2003, 12% of all U.S. open-end mutual fund and ETF assets were invested in passively managed products; recently, that percentage stood at 27%--and rising. And also true, the average active fund has had a hard time beating the index.

But investors who choose to employ actively managed strategies in their portfolios needn't settle for average. Several managers have shown over time that they can add value by employing durable strategies. This week, we're taking a closer look at how a handful of them have been able to do it.

Before we get started, a few things to keep in mind. First, these profiles represent just a sample of actively managed funds that have great long-term track records. Several other active fund managers are worth considering--particularly those rated Gold, Silver, or Bronze by Morningstar analysts, signifying our high confidence in their future ability to deliver for investors.

Second, just because these funds have beaten the benchmarks over time doesn't mean investors have always used them well. Indeed, in order to beat the market, these funds will often look very different, which means they can also seem out-of-step--sometimes badly out of step. Truly understanding an active fund's strategy is key to getting your money's worth. At times, a great deal of patience is required. 

Lastly, we do believe there is more than one way up the hill for investors. Can an all-index portfolio get you to your goals? Absolutely. All active? Yes. A blend of active and passive? For sure. But if you do go active, you'll want to understand what to look for--the hallmarks of a durable and repeatable strategy--and what to expect in good markets and bad. Learning more about these managers is a great way to begin.

Be sure to bookmark this page and visit each day this week for a new profile, including in-depth interviews with the managers about their strategy, outlook for the market, and areas of opportunity today, as well as interviews with the Morningstar analysts who cover the funds and excerpts from the funds' Premium Analyst Reports. On Friday, tune in to hear from Morningstar strategists Josh Peters and Matt Coffina about their dividend and wide-moat investing strategies, plus their take on today's marketplace.

Monday | April 21
David Giroux:  T. Rowe Price Capital Appreciation (PRWCX)

Tuesday | April 22
David Herro:  Oakmark International (OAKIX)  

Wednesday | April 23
Charles Pohl and Diana Strandberg:  Dodge & Cox Stock (DODGX)

Tom Dugan:  Dodge & Cox Income (DODIX)

Thursday | April 24
Dan Fuss:  Loomis Sayles Bond (LSBDX)

Friday | April 25
Matt Coffina: Morningstar StockInvestor

Josh Peters: Morningstar DividendInvestor 

 

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