CHICAGO -- So I'm a nerd. I actually love going to conferences where asset size and turnover ratios are cocktail chatter, where the buzz is about benchmarks. Where small investors wake at the crack of dawn to get a glimpse of (or take to task) an industry giant. No question, you don't come to the biggest mutual fund gathering of the year if you aren't into mutual funds.
Of course, last night, as more than 1,000 participants, longtime professionals and retail investors alike arrived at the annual
Morningstar Investment Conference
in Chicago, some skepticism surfaced, too. That's not so surprising after 1998, when most active managers couldn't keep up with the index. But even though the featured sessions get underway today (and we'll bring you explanations from those having a tough time and stock picks from the market-busting managers), here are a couple of early observations:
Finally! or Every Sector Has Its Day
"Value Investing Is Back!" trumpets an invitation to meet the manager of the
Babson Value fund. Of course, you might ask, how often have we heard that?
But on the day the
charged past 11,000, fueled by some of those long-unloved cyclicals, value once again seemed, well, valuable. At least that's the talk here.
Still, one month of gains doesn't wipe out several years of tough times for funds that chase cheap stocks. And you don't find many touting their records. A handout from
, for example, described in detail each of its five funds, including asset size, expense ratio and minimum investment. No mention, however, of the number most investors look for first: return. (Kudos go to
for its willingness to own up to minus signs -- down 8.8% as of March 31 -- though the fund group doesn't hesitate to say it is up year to date, if you include April.)
Really Going Against the Grain
Morningstar research shows that if you own a basket of the three least-popular categories of funds (measured by cash outflows) and keep it for the next three years, you will beat the average equity fund.
Last year's most disliked? Natural resource funds, Latin America funds and Asia-Pacific funds excluding Japan.
Easier said than done, right? Even Morningstar's research director admitted, "I can talk a good game. But was I buying these funds?" Morningstar's John Rekenthaler said he believed enough to hold on, but he wasn't putting fresh money into 1998's dogs.
Tools of the Trade
For some, the emphasis is not on value, but value-added. Seems you do-it-yourselfers who construct your own portfolios have some of the pros running scared. At a seminar on sophisticated software that can slice and dice the mutual fund universe, one financial planner wanted to skip the basics. "Where can we add any value-added?" he asked, as the presenter demonstrated how anyone can use these tools to find the right fund for a portfolio.
More to come: What is Wally Weitz, the value manager on a roll, buying? What do top techies have to say about the sector's slump? Joe Bousquin and I will have the stories.
Brenda Buttner had no positions in the funds mentioned in this column, although holdings can change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks or funds. While she cannot provide investment advice or recommendations, Buttner appreciates your feedback at