Four Picks for the Present
This article first appeared in the April/May 2011 issue of Morningstar Advisor magazine. Get your free subscription today!
Mutual Fund: Fidelity Municipal Income
This fund has what it takes to handle all types of markets. It's run by Jamie Pagliocco, who comanaged the fund with Christine Thompson before she became CIO of Fidelity's bond group in 2010. Pagliocco maintains the same prudent, team-based approach that has produced outstanding long-term returns with below-average volatility across the Fidelity muni-fund lineup. The fund's emphasis on high-quality, liquid bonds led to a strong defensive showing in downturns such as 2008's financial crisis and the recent municipal-bond sell-off. But Pagliocco and crew have also made moves that should help it outperform in more favorable climates. (Miriam Sjoblom)
Exchange-Traded Fund: Vanguard Global ex-US Real Estate
Vanguard's new global real estate offering is the cheapest and most diversified global real estate ETF on the market. Investors should look into this fund, which offers access to the 70% of the real estate market left out by U.S. REIT funds. International real estate funds have not enjoyed broad acceptance, with total ETF assets slightly under $3 billion, versus close to $17 billion in U.S.-focused ETFs. Unlike U.S. REITs, international real estate companies have not recovered their pre-crisis peaks, leaving them with potentially attractive valuations. (Samuel Lee)
Separate Account: Manning & Napier Core Equity
This separate account pretty much does it all. It has outperformed in up markets while also holding up better than nearly all of its large-growth rivals in downdrafts. Its team managed and leverages the same team of proven analysts that supports Manning & Napier's successful line-up of separate accounts and mutual funds. They use a global, all-cap approach and meld a range of styles, looking at growth, cyclical, and deep-value plays. That may seem a tad unwieldy, but the team's bottom-up research and timing has been spot on. Simply put, they've been in the right place at the right time much more often than not, and they've picked the right stocks with regularity. (Michael Breen)
Stock: Range Resources
The Marcellus is arguably the premier shale gas play in North America, and no one is better positioned here than Range Resources.
The firm holds close to 1 million highly prospective acres under long-term, low-cost leases, which, alongside Range's legacy positions in the Barnett Shale and gas fields of southwest Virginia, should support considerable production and reserve growth over the next decade. Range's other key properties include 40,000 core acres in the Barnett Shale and the firm's acreage in the Nora and Haysi plays of Virginia. Both properties provide attractive economics and an element of diversification given Range's large stake in the Marcellus, although we don't expect meaningful contribution from these regions (at least relative to that of the Marcellus) in the years ahead. Upside could come from Range's recent drilling efforts in the Berea sandstone and Huron shale horizons of its Nora/Haysi acreage. (RJ Towner)
Hindsight: February/March 2010
Our picks from the February/March 2010 issue haven't been as great as they first appear. All the picks are well in the black, but only one is topping its market index. Mutual fund Sequoia