A Flexible Fund for Investors Playing the Long Game

Jeff Holt: This week's [Morningstar] Medalist is Manning & Napier World Opportunities. It’s an international-equity fund that has [a Morningstar Analyst Rating of Gold]. This fund is very flexible relative to its peers from a country, sector, and market capitalization standpoint. They've been consistently heavy in European stocks. But they've trimmed that exposure a bit, and they've found more opportunities in Latin American stocks. They've consistently been underweight and pretty light on Japanese stocks.

From a sector standpoint, they have a significant overweight in consumer staples stocks--particularly grocers and brewers. They are also pretty heavy in energy stocks and have also been very light on financial stocks.

Manning & Napier has a very repeatable process that inspires confidence that this strategy will continue to do well over the long term. Analysts are the ones driving this flexibility, and they are doing research on companies around the globe to identify stocks that meet specific criteria.

An interesting aspect of their approach is that before they can present any of their ideas to the senior research group that manages the fund, they have to find a peer to co-sponsor that idea. So, that creates a check and balance on any ideas that they have. And both the analyst's and the peer's compensations are based on both the absolute and relative performance of that stock.

Because of its flexible approach, the fund's performance may deviate significantly from its peers and the benchmark and may sometimes underperform. But over the long term, the fund has rewarded investors handsomely.