Investment Strategy
We seek to pick winning funds with superior management and quantitative characteristics linked to strong performance. Our quantitative research uses the most comprehensive mutual fund database in the world to determine the best strategies for long-term investing success. We then supplement those studies with extensive qualitative research of portfolio managers, analysts, and traders through onsite visits and follow-up phone calls.
 
About the Editor
Russel Kinnel is director of manager research for Morningstar, Inc. and editor of Morningstar FundInvestor, a monthly print newsletter for individual investors. He also writes the Fund Spy column for Morningstar.com, the company's investment Web site.

Since joining the company in 1994, Kinnel has covered the Fidelity, Janus, T. Rowe Price, and Vanguard mutual fund families. He helped develop the new Morningstar Rating for funds and the new Morningstar Style Box methodology. He also is co-author of the company's first book, The Morningstar Guide to Mutual Funds: 5-Star Strategies for Success, which was published in January 2003.

 
 
May 26, 2016
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About Russel Russ' Photo
Russel Kinnel,
Director of Manager Research and Editor, Morningstar FundInvestor
Russel Kinnel is director of manager research for Morningstar, Inc. and editor of Morningstar FundInvestor, a monthly print newsletter for individual investors.
Featured Posts
The Summer of Our Discontent

Summer is approaching, and, once again, Greece, the IMF, and the European Union are headed for a confrontation. As before, we can comfort ourselves in the knowledge that Greece is a tiny part of Europe's economy. So the downside of any fallout might not be that bad.

But this summer, we've got much bigger things to worry about. Britain is preparing to vote on June 23 on whether it should leave the EU. The United Kingdom's economy is of course a big one, and the impact would likely be dramatic.

The chances of Britain's exit declined after President Obama expressed skepticism about a quick trade deal with the UK in the aftermath. Today, pollsters show a slight majority of voters favoring staying in the EU and think that there is only a one in three chance of Britain voting to leave. Still, there's enough to cause worry.

From this side of the pond, I don't see the Brexit's appeal as the UK has already opted out of the euro and thus is not subject to one of the worst things about the EU. However the vote turns out, we're likely to see a lot of volatility in the coming weeks.

We've also got the upcoming U.S. presidential election in November, and my guess is that it will have a greater impact on the markets as the vote draws near.

And Venezuela appears to be imploding.

There's also the issue of negative interest rates. Bond fund managers tell us that they don't think negative rates are helping stimulate growth very much, and they think it very unlikely that Janet Yellen will pursue that idea at the Fed. In any case, the Fed will bear close watching as it tries to balance economic growth, the dollar, and inflation. As one of the few central banks that's raising rates, this will be a challenge.

So, what should you do? For starters, expect more volatility. I wouldn't sell my stock funds, though. You might allow a bit of cash to build so you can buy if we do see a sizable sell-off. You might opt for a more conservative fund with your next choice. But generally, these tempests blow over and the markets and economy keep chugging along.

Four New Categories
We've created four new Morningstar Categories in a variety of asset classes. Josh Charlson wrote about the new categories in this article.

Seafarer Fund Rated Bronze
We issued our first Analyst Rating of Seafarer Overseas Growth and Income SFGIX. You can read Bill Rocco's report here.

There is a seasoned and skilled skipper at the helm of Seafarer Overseas Growth and Income. Lead manager and chief investment officer Andrew Foster spent one dozen years at Matthews International Capital Management before he co-founded Seafarer Capital Partners in 2011. Foster had an effective term as director of research as well as successful tenures as a comanager and lead manager at the firm. He has a solid four-person investment team here--with significant Latin American and global emerging-markets expertise--which is encouraging given that he focused on investing in Asia while at Matthews. The overall strength of Foster and the investment team is one reason that this diversified emerging-markets fund earns a Morningstar Analyst Rating of Bronze.

Meanwhile, Foster follows a sound strategy on this fund that is quite similar to the one that he and other managers have used to produce good risk-adjusted returns at Silver-rated Matthews Asian Growth and Income MACSX. Specifically, he invests in a mix of dividend-paying common and preferred stocks and convertible and other bonds. He considers developed-markets securities as well as emerging-markets issues. He regularly allows his security selection to lead to atypical geographic and sector weightings. And he takes an all-cap approach and focuses on a few dozen names.

Foster has executed this distinctive process deftly thus far, and this fund has handily outpaced the average diversified emerging-markets offering and the MSCI Emerging Markets Index on both a total return and risk-adjusted basis since opening in February 2012. This fund also has a relatively attractive expense ratio that gives it a leg up going forward.

There is a significant amount of key-man risk here, and the atypical asset mix could well hold this fund back in certain types of equity rallies in the future. But emerging-markets fans who are comfortable with those risks and have long time horizons have ample grounds to check this fund out.

 

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