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.

8 Head of global manager research Jeff Ptak said we're changing the way we present the track records of mutual funds that converted from hedge funds. In short, these funds' performance records after their conversion to mutual funds have tended to diverge sharply (in a bad way) from the track records they achieved as unregistered hedge funds.

"Only eight of the 23 hedge funds that had beaten their prospectus benchmarks pre-conversion also topped them after converting. What's more, the shortfalls were often massive: The 15 funds that lagged their benchmark did so by nearly 10% per year, on average."

3 Value stocks have been underperforming for a while, and 2017 is no exception. The Morningstar US Value Index is up only about 1.5% this year, compared with over 10% for the broad market. But underperformance is no reason to abandon value. Our fund analysts discuss three value funds they think have a good shot of outperforming their categories over time.

25 We looked at the 25 funds that had seen the biggest inflows in absolute dollar terms over the one-year period through April 30. One takeaway from the results: Investors continue to embrace simpler and cheaper investment options such as index funds and target-date vehicles.

6.03 million JOLTS data and job openings data revealed that despite a disappointing May employment report, there is no shortage of jobs, said director of economic analysis Bob Johnson.

"What happened was we had 6.03 million job openings. That's a new high since they've been keeping records of this, which is only back to 2000... But still, over those 17 years the number of openings we have right now is higher than it's ever been. So, clearly, there are a lot of openings out there that have not been filled across a wide variety of industries."

4 to 5.5 minutes If you live along the mid-Atlantic, you may be able to see some blue-green and red artificial clouds that will be produced as part of NASA's rocket launch test this Sunday. The rockets are designed to study the ionosphere and aurora, NASA said.

"Canisters will deploy between 4 and 5.5 minutes after launch releasing blue-green and red vapor to form artificial clouds. These clouds, or vapor tracers, allow scientists on the ground to visually track particle motions in space."

4 Adam McCullough, an analyst focusing on passive strategies, discussed four highly rated exchange-traded funds that ply dividend strategies. The ETFs he recommends use different passive strategies, but they have processes in place to ensure that they target companies with safe dividends.

"On the passive side the important part is that you want to be tilted toward higher-yielding stocks but also avoid those stocks that maybe more likely than others to cut their dividend payment in the future. And so, since these are ETFs and they follow an index, they don't have the active management side to say, hey, this company is not looking as strong, maybe we should lower its weight or get it out of the portfolio. So, you have to have a process in place ahead of time to ensure, try to ensure as best you can, that those stocks won't be held in a higher weight in the portfolio."

318 Theresa May's conservative party failed to win a majority vote in the U.K. general election, winning only 318 of the 326 required seats in Parliament. Emma Wall, senior editor for Morningstar.co.uk, spoke to three experts about how a hung parliament will affect stock markets and the economy.

$23 trillion President Donald Trump's decision to withdraw from the Paris climate agreement may be a setback for the United States as a global leader, but not for global efforts to combat climate change, said head of sustainability research Jon Hale. In fact, investors are playing a key role, he said.

"For their part, sustainable investors, $23 trillion strong globally, will keep pressing the companies they own to address climate risk by staying on track to reduce emissions in line with the Paris agreement and by reporting to investors on the overall risks and opportunities that climate change poses for their businesses."

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