Fund Spy

Author Russel Kinnel walks readers through the handful of key factors they need to pick winning funds. Armed with the quantitative data and qualitative research, they will gain the confidence to pick great funds for the long-term. This book will be accompanied by a web-based tool created by Morningstar, which will enable readers to evaluate their own funds using Kinnel's criteria.

Written in a fun and accessible manner, The Fund Spy offers Kinnel's unique insight as a 14-year Morningstar fund analyst. He speaks plainly about the conflicts that can go against investors' interests, explaining how to avoid traps and push out the slick sales pitches facing today's investors. He also offers several "10 lists," which provide quick answers to investors' most common questions (e.g., the Top 10 Funds to Recommend to Relatives, the 10 Best Contrarian Managers, the 10 Most Overrated Managers).

Foreword ix

Preface xi

Acknowledgments xv

Chapter 1: The Remarkable Gap Between Winners and Losers 1

Chapter 2: Does Your Manager Eat His Own Cooking? 9

Chapter 3: New Trading Cost Estimates Shed Light on a Big Mystery 17

Chapter 4: The Power of Expense Ratios Is Greater Than You Think 25

Chapter 5: How to Use Total Returns Wisely 35

Chapter 6: Understanding Mutual Fund Strategies and Fundamental Risk 45

Chapter 7: How to Find Good Managers and Avoid the Dodgy Ones 69

Chapter 8: The Inside Scoop on No-Load Fund Companies 77

Chapter 9: The Inside Scoop on Broker-Sold Fund Companies 99

Chapter 10: Twenty Great Funds That Passed My Test 111

Appendix A: The Best of Eleven Years of Fund Spies 121

Appendix B: Vital Statistics on the 20 Funds That Passed Our Test 153

Glossary 157

About the Author 169

Index 171

Russel Kinnel is Director of Mutual Fund Research for Morningstar and Editor of Morningstar FundInvestor, a monthly newsletter for individual investors. He also oversees Morningstar's Fund Analyst Picks and Pans and writes the "Fund Spy" column for Morningstar.com. He joined the company in 1994 and holds a bachelor's degree in economics and journalism from the University of Wisconsin–Madison.

Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offers an extensive line of Internet, software, and print-based products and services for individuals, financial advisors, and institutions. Morningstar provides data on more than 290,000 investment offerings, including stocks, mutual funds, and similar vehicles. The company has operations in 18 countries and minority ownership positions in companies based in three other countries.

FundSpy

Morningstar's Inside Secrets to Selecting Mutual Funds that Outperform

Many people spend more time researching purchases like cars and computers than they do figuring out how they will invest their money. Although buying a car or computer may be more fun, choosing the right investments can significantly impact your life—whether it be retirement or your kids' college education.

Picking funds that will outperform their peers over the long haul may take a little time, but in the end, you'll be better off for it. That's why Russel Kinnel—Director of Mutual Fund Research for Morningstar, Inc. and Editor of Morningstar^® FundInvestor—has written Fund Spy. With a straightforward and accessible style, this book offers unparalleled guidance that will sharpen your investing skills and help you find the best funds for your portfolio.

With this book as your guide, you'll discover:

• How knowing a fund's strategy can enable you to properly evaluate performance, adopt reasonable expectations, and build a portfolio of funds that work together
• Why you want fund managers who "eat their own cooking"
• The pros and cons of big no-load fund companies and broker-sold fund companies
• And much more

You don't have to be a professional fund manager to succeed at this endeavor, but you do have to be prepared. Fund Spy contains proven methods that will allow you to build a portfolio of dependable funds that will prosper over the long term.