continue to combine convertible bonds-a security in which the issuing company grants you the right to swap your bond for shares of common stock at a predetermined price-with junk bonds, a style that has made her a star in the high-yield field. “The fund is likely to have a competitive yield but not the highest current yield,” Dziubinski says. “Instead, it seeks bonds with the potential for capital appreciation as well, in order to deliver higher total returns to investors.”
Delivering higher total returns certainly is a worthy goal, one that Morningstar’s dozen may well attain. Does Dziubinski feel comfortable enough in these picks to put her own money at risk? “I bought TIAA-CREF Growth & Income as a gift for my godchild,” she says, “and I’ll be buying Oakmark Select the second it becomes available in Morningstar’s 401(k) plan, which is soon.”
As you decide whether to take a chance on these or other newcomers, you may want to adopt the tack of Sharon and Darryl Ward. Even though they work with a financial planner, the Wards study every investment before they part with a single buck of their hard-earned savings. “We want to know the [fund] manager’s investment goals,” says Sharon, “and make sure that we’re comfortable with them. No one else can make that decision for us.”
Or, in the final analysis, for you.
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The Dynamic Dozen B.E. asked Morningstar to identify the next generation of hot mutual funds. The 12 investments below, selected by Morningstar Fund Investor’s Susan Dziubinski, represent those that will have the most promise in years to come. |
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TOTAL RETURNS |
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FUND |
TICKER |
CATEGORY |
YEAR-T0 DATE |
12 MONTHS |
THREE YEARS |
MINIMUM INITIAL INVESTMENT |
TELEPHONE |
| Artisan Small Cap Value | (ARTVX) | Small Value | 12.69% | 17.87% | N/A | $1,000 | 800-344-1770 |
| Baron Growth | (BGRFX) | Small Growth | 17.57 | 56.00 | 19.35% | $2,000 | 800-992-2766 |
| Longleaf Partners International | (LLINX) | Foreign Stock | 26.58 | N/A | N/A | $10,000 | 800-445-9469 |
| Marsico Focus | (MFOCX) | Large Growth | 15.93 | 51.99 | N/A | $2,500 | 888-860-8686 |
| Masters’ Select Equity | (MSILXO) | Large Blend | 16.65 | 46.03 | N/A | $5,000 | 800-960-0188 |
| Metropolitan West Alpha Track 500 | N/A*** | Large Blend | 9.34 | 46.13 | N/A | $5,000 | 800-241-4671 |
| New World* | (NEWFX) | Foreign Stock | N/A | N/A | N/A | $1,000 | 800-421-9900 |
| Oakmark Select I | (OAKLX) | Mid-Cap Value | 8.80 | 43.47 | N/A | $1,000 | 800-625-6275 |
| Third Avenue High Yield** | (TAHYX) | High Yield Bond | 13.84 | 15.55 | N/A | $1,000 | 800-443-1021 |
| TIAA-CREF Growth & Income | (TIGIX) | Large Blend | 9.39 | 41.49 | N/A |
ACROSS THE WEB
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