Morningstar Runs the Numbers

Inspired by Harper's Index (with a tip of the hat to FiveThirtyEight's Significant Digits blog), Morningstar Runs the Numbers uses a numbers-based approach to highlight recent Morningstar research, along with some outside news stories.

3 The annual Morningstar Investment Conference in Chicago was three days packed with insights from some of the most innovative minds in investing. From continued questions about elevated stock valuations to the path of interest rates to the future of the fiduciary standard, there was no shortage of big issues to tackle this year. Morningstar analysts and editors provided on-the-ground coverage of the conference, including insights from top panels, video interviews with prominent fund managers, and highlights from keynote presentations by Jack Bogle, author Michael Lewis, Morningstar CEO Kunal Kapoor, BlackRock's Larry Fink, and Wikipedia's Jimmy Wales.

93% Equity analyst Rodney Nelson said while Microsoft's third-quarter earnings were mostly in line with his expectations, investors should key in on "impressive growth figures from Microsoft's leading cloud franchises" and pay less attention to its hardware business. Nelson plans to boost Microsoft's fair value estimate and thinks the stock is modestly undervalued.

"Third-quarter adjusted revenue rose 6% versus the prior-year period to $23.6 billion, as each of Microsoft's flagship cloud properties delivered strong performances. Azure revenue rose 93% in the quarter, while Azure premium services (built around themes such as the "Internet of Things," artificial intelligence, and automation), grew in excess of 100% for the 11th consecutive quarter."

5 Russ Kinnel, director of manager research, looked at the funds that are attracting the most inflows and noted that most of these asset-gatherers are funds we rate highly. But there were five notable exceptions. Kinnel lists the five of the most popular funds that fail to impress us, and details the flaws that keep us from endorsing them.

16 million April 29 marks the 13th anniversary of the opening of the National World War II Memorial in Washington, D.C., according to History.com.

"(The monument provides) overdue recognition for the 16 million U.S. men and women who served in the war. The memorial is located on 7.4 acres on the former site of the Rainbow Pool at the National Mall between the Washington Monument and the Lincoln Memorial. The Capitol dome is seen to the east, and Arlington Cemetery is just across the Potomac River to the west."

3 For a while, consumer staples stocks were investor darlings. Compared with bonds' paltry yields, their relatively high yields were quite alluring. Investors might also have figured that in shaky economic times, big-ticket purchases might be delayed, but toothpaste and shampoo would continue to be in demand. But in 2016, this sector fell out of favor. "Interest rates started rising, reducing the appeal of their dividends. The U.S. election results led many people to expect a spike in growth, and the possibility of lighter regulation bolstered the appeal of financial stocks," said senior analyst Gregg Wolper. He names three funds with notably high stakes in consumer defensive stocks that could face headwinds if the sector continues to lag.

5 This spring's housing market has been described as the "strongest seller's market ever," thanks to tight supply of homes for sale as well as still-low interest rates. Among those flocking to the market are younger buyers (age 36 and younger), says director of personal finance Christine Benz. Though not always advisable, many home purchasers look to their retirement accounts as a potential source of funding. Benz outlines five options for tapping retirement accounts for the purpose of buying a home.

"If you've decided to tap a portion of your retirement account to help boost your down payment, know that some ways of doing so will be less harmful than others. Below, I've ranked the available retirement-account withdrawal options from least harmful to most (aka "should be marked with a skull and crossbones")."

10 Morningstar vice president of research John Rekenthaler discussed a study cited by The Wall Street Journal that found that more than 90% of all actively run U.S. diversified funds lagged their benchmarks over the trailing 15-year period ended December 2016. We thought it would be fun to take a look at some actively run funds that have beaten the S&P 500 index over the same trailing 15-year period. While it's true that most funds won't beat market indexes over long stretches after accounting for fees, this article takes a closer look at 10 Morningstar Medalists that did.