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Investing

Dispatch From Morningstar, Part 1

At the annual Morningstar conference in Chicago, financial pros discuss mutual funds and investing trends.

It wasn't exactly a man-bites-dog story as the annual Morningstar conference in Chicago got under way Wednesday, with speakers stressing the merits of long-term investing in a turbulent market. Other buzz-worthy topics included the pending revival of big-company growth stocks, the landscape of international investing, and new research about fund managers investing in their own funds.

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Michael Mauboussin, chief investment strategist for Legg Mason Capital Management, devoted his opening address to the psychology behind investors' tendency to seek short-term gratification despite the practicality of long-term investing. After his speech, a panel of Morningstar staff members discussed the recent move of some well-known value managers -- including Legg Mason's Bill Miller and Oakmark's Bill Nygren -- into large-company stocks. "They've moved to more beaten-up areas, and that gives me a lot of confidence that this may be where the values are," said Don Phillips, managing director of Morningstar. Christine Benz, director of mutual-fund analysis, urged investors to carefully consider their choices in this arena. "Really pick through and look for managers who are focused on high-quality growth companies," she said, citing ABN AMRO/Montag Caldwell Growth (symbol MCGFX) and Dreyfus Appreciation (DGAGX) as examples. "We think those funds are truly poised for good returns."

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The panel also touched on the recent pullback in global markets and what it means for investors. Benz told investors to "look beneath the hood" of funds because she said it's not unusual to see domestic stock funds currently heavily invested overseas. "Look at what your core funds own before adding that foreign-market exposure," she said. A panel on international investing Thursday will delve more deeply into the outlook overseas.

Russel Kinnel, Morningstar's director of mutual fund research, discussed his yet-unreleased study of the extent to which 500 fund managers invest in their own funds. Kinnel said managers at Denver-based Janus Capital are among the largest investors in their own funds. Van Kampen funds and TIAA-Cref are on the other end of the spectrum -- managers there are among those who invest the least in their funds, Kinnel said.

Among other scheduled speakers at the conference, which runs through Friday, are veteran fund managers Nygren, Ron Muhlenkamp, David Winters, and Bruce Berkowitz.

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