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 mutual fund 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.

 
 
Nov 01, 2014
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About Russel Russ' Photo
Russel Kinnel,
Director of Fund Research and Editor, Morningstar FundInvestor
Russel Kinnel is director of mutual fund research for Morningstar, Inc. and editor of Morningstar FundInvestor, a monthly print newsletter for individual investors.
Featured Posts
These Funds Have Scary Outflows

The fund world's eyes are focused on PIMCO Total Return's PTTRX October flows. Have they slowed or is the exodus gaining steam?

But on percentage terms, quite a few funds are in similar straits. I count 35 funds in the Morningstar 500 with greater redemptions in percentage terms from October 2013 through September 2014. To be sure, PIMCO Total Return will jump up the list when October's data comes in, but it's worth looking at a few funds. Some of these have Morningstar Analyst Ratings of Neutral, so you could say we agree with those who are bailing, but there are some Morningstar Medalists, too.

PIMCO Global Multi-Asset PGMDX has shed 71% of assets because of disappointing performance and manager changes. The fund was supposed to make savvy allocation calls while having tail risk insurance to help in severe
sell-offs. Unfortunately, it has made poor calls and its overall cautiousness hasn't worked well in a powerful stock rally. In dollar terms, the fund's $2 billion in redemptions probably isn't a big problem for PIMCO to manage, so I don't think redemptions are a big problem. We rate the fund Neutral.

Turner Midcap Growth TMGFX has shed 68% of assets. Although the fund outperformed in 2013 and has again so far in 2014, its poor long-term results appear to have led investors to throw in the towel.  It's not ideal to be managing so many redemptions, but I don't think they are a big problem here, either. We rate the fund Neutral.

Harbor Real Return HARRX is a PIMCO-run fund that has seen 58% of assets go out the door. Treasury Inflation-Protected Securities funds have suffered heavy redemptions as investors were shocked by TIPS losses in 2013 when a spike in interest rates coupled with a decline in inflation provided the perfect storm. This fund invests in pretty liquid holdings, so again, the outflows probably don't create a big headwind. We rate the fund Silver.

Third Avenue International Value TAVIX has suffered 58% net redemptions because of a performance slump and the departure of longtime manager Amit Wadhwaney. The one-two punch is brutal. I could see where redemptions would be a problem here because the fund holds some obscure names that it no doubt has to sell. We rate the fund Neutral.

Royce Low Priced Stock RYLPX hit a wall as materials stocks slammed performance. The fund has lost 54% of assets over the past 12 months. The fund is finally outperforming this year, but its five-year numbers stink. We are holding to our Silver rating because we think Whitney George is a skilled manager. So far, we aren't seeing signs that flows are a problem, and they've slowed a bit with the improved returns. Still, we'll be watching it closely as flows can be disruptive at small-cap strategies.

Thornburg International Value TGVAX has seen 46% of assets flee, and that pace is picking up with $1.8 billion going out the door in September on a $15.8 billion asset base. The Bronze-rated fund has suffered poor performance and manager Wendy Trevisani's departure in April. The fund may have gotten a little too big, and the rate of redemptions is worrisome.

Interview With Jack Bogle
Christine Benz sat down to chat with Jack Bogle. You can see the videos here.

 

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