Morningstar Advisor - December/January 2010 - 15
Juli Erhart-Graves, CFP, president, Worley Erhart-Graves Financial Advisors, and partner Grace Worley Fund VCVSX. In addition, she thinks that inflation will become an issue for investors in coming years, so she added portions of the iShares Barclays TIPS Bond TIP as well. And she likes Loomis Sayles Global Bond LSGLX because it seeks out opportunities for bonds around the world. To construct a portfolio, Erhart-Graves maintains a short list of five or six funds in each section of the Morningstar Style Box. She says that she leans toward value, and the resulting portfolios reflect that bias. Then, using Morningstar Office, she digs deeper to make sure the funds have low fees and are tax-efficient. She uses exchange-traded funds when there are large lump sums to invest. She reviews client portfolios once a year. “We don’t do quarterly performance reporting,” she says. “Our philosophy is that what’s really needed is an annual rebalancing. The goal is to pick quality managers who make those decisions on a day-by-day basis.” Even then, most portfolio changes are for rebalancing purposes, not because of performance. “If I recommend a fund or an ETF to a client, that client is going to own it for years and years,” she says. Case in point is Templeton Foreign TEMFX, one of the oldest and most respected funds in the foreign-stock category. Earlier in the decade, the fund’s value orientation held it back from its peers. But Erhart-Graves believed in then-manager Jeff Everett’s ability to keep the fund on track for the long term. She has been rewarded: The fund is in the top 4% of foreign value stock funds over the past three years and continues to hold a respectable long-term performance record. “We knew it was a deep-value fund, and we expected it to be out of step with its peer categories from time to time,” she says. K Ilana Polyak is a New York-based freelance writer. How she caught our eye: Erhart-Graves and partner Grace Worley believe that most people need financial planning before investment management. Career path: Worked various positions at Worley Financial Advisors from 1995 to 2000 while attending Indiana University; from 2000 to 2002, worked as senior investment advisor at Conseco. Returned to Worley in 2002; bought firm in 2008. Personal: Age, 40; married with one daughter, age 15, and two step-daughters, ages 21 and 23. Hobbies revolve around animals. Erhart-Graves is president of the Spay and Neuter Services of Indiana and is the owner of three cats and three dogs. Favorite funds: Schwab Core Equity SWANX, Columbia Value & Restructuring UMBIX, Perkins Mid Cap Value JDPAX. eventually, her clients will transition to me.” This past year, as markets were in turmoil, Erhart-Graves’ warm fuzzies were tested as she had to soothe her nerves. The firm held regular client briefings, including a twohour event at which she and Worley dissected the history of stocks and bonds. They also reviewed the mutual funds they held to assure investors that, despite the market drop, their fund managers were doing better than average. About a third of their clients showed up to the meeting. “Clients went away from that with a much better feeling about the portfolios,” Erhart-Graves says. The firm also sent follow-up e-mails and letters to keep clients abreast of market developments. As a result, hardly any clients made dramatic changes to their portfolios, though a handful felt that they couldn’t stomach the volatility and sold their equities. “Our goal is to build good, all-weather portfolios that you won’t have to flee when times are tough,” ErhartGraves says. “You can tell me as much as you want that you have a high risk tolerance—I’m still not going to put you 90% in stocks.” Emphasis on Asset Allocation Just as she advised her clients to adopt a “stay the course” mentality, Erhart-Graves herself made few changes to her clients’ portfolios. She felt confident that she and Worley had made good upfront investment decisions. “Obviously we want to take advantage of the markets when there are opportune investments, but we’re not market-timers,” she says. She found those opportunities over the past year in convertible securities, mainly through the Vanguard Convertible Securities MorningstarAdvisor.com 15
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Morningstar Advisor - December/January 2010
Table of Contents for the Digital Edition of Morningstar Advisor - December/January 2010
Morningstar Advisor - December/January 2010
Contents
New on MorningstarAdvisor.com
Letter from the Editor
Contributors
How Big a Role Do Alternative Investments Play in Your Practice?
In for the Long Term: Dana Emery
It's All About the Plan
Investment Briefs
A More Powerful Bankruptcy Prediction Model
This Time It’s Personal
Alternative Investments Go Mainstream
After Meltdown, More Advisors Turn to Alternatives
Where to Find Low Correlation
Commodities Are a Rock in a Hard Place
How Alternatives Protect Portfolios
Shipshape
Slow Scrutiny
Four Picks for the Present
Are Utilities’ Dividends Worth the Worry?
High-Confidence Stock Picks
Long-Short Funds That Pass a Simple Stress Test
Mutual Fund Analyst Picks
50 Most Popular Equity ETFs
Undervalued Stocks
VA Sales See Some Recovery
New at Morningstar
I Read the News Today, Oh Boy
Morningstar Advisor - December/January 2010 - Morningstar Advisor - December/January 2010
Morningstar Advisor - December/January 2010 - Cover2
Morningstar Advisor - December/January 2010 - Contents
Morningstar Advisor - December/January 2010 - 2
Morningstar Advisor - December/January 2010 - 3
Morningstar Advisor - December/January 2010 - New on MorningstarAdvisor.com
Morningstar Advisor - December/January 2010 - 5
Morningstar Advisor - December/January 2010 - 6
Morningstar Advisor - December/January 2010 - Letter from the Editor
Morningstar Advisor - December/January 2010 - Contributors
Morningstar Advisor - December/January 2010 - 9
Morningstar Advisor - December/January 2010 - How Big a Role Do Alternative Investments Play in Your Practice?
Morningstar Advisor - December/January 2010 - 11
Morningstar Advisor - December/January 2010 - In for the Long Term: Dana Emery
Morningstar Advisor - December/January 2010 - 13
Morningstar Advisor - December/January 2010 - It's All About the Plan
Morningstar Advisor - December/January 2010 - 15
Morningstar Advisor - December/January 2010 - Investment Briefs
Morningstar Advisor - December/January 2010 - 17
Morningstar Advisor - December/January 2010 - 18
Morningstar Advisor - December/January 2010 - 19
Morningstar Advisor - December/January 2010 - A More Powerful Bankruptcy Prediction Model
Morningstar Advisor - December/January 2010 - 21
Morningstar Advisor - December/January 2010 - 22
Morningstar Advisor - December/January 2010 - 23
Morningstar Advisor - December/January 2010 - 24
Morningstar Advisor - December/January 2010 - 25
Morningstar Advisor - December/January 2010 - This Time It’s Personal
Morningstar Advisor - December/January 2010 - 27
Morningstar Advisor - December/January 2010 - 28
Morningstar Advisor - December/January 2010 - 29
Morningstar Advisor - December/January 2010 - 30
Morningstar Advisor - December/January 2010 - 31
Morningstar Advisor - December/January 2010 - Alternative Investments Go Mainstream
Morningstar Advisor - December/January 2010 - 33
Morningstar Advisor - December/January 2010 - 34
Morningstar Advisor - December/January 2010 - 35
Morningstar Advisor - December/January 2010 - After Meltdown, More Advisors Turn to Alternatives
Morningstar Advisor - December/January 2010 - 37
Morningstar Advisor - December/January 2010 - Where to Find Low Correlation
Morningstar Advisor - December/January 2010 - 39
Morningstar Advisor - December/January 2010 - Commodities Are a Rock in a Hard Place
Morningstar Advisor - December/January 2010 - 41
Morningstar Advisor - December/January 2010 - How Alternatives Protect Portfolios
Morningstar Advisor - December/January 2010 - 43
Morningstar Advisor - December/January 2010 - 44
Morningstar Advisor - December/January 2010 - 45
Morningstar Advisor - December/January 2010 - 46
Morningstar Advisor - December/January 2010 - 47
Morningstar Advisor - December/January 2010 - Shipshape
Morningstar Advisor - December/January 2010 - 49
Morningstar Advisor - December/January 2010 - 50
Morningstar Advisor - December/January 2010 - 51
Morningstar Advisor - December/January 2010 - Slow Scrutiny
Morningstar Advisor - December/January 2010 - 53
Morningstar Advisor - December/January 2010 - 54
Morningstar Advisor - December/January 2010 - 55
Morningstar Advisor - December/January 2010 - Four Picks for the Present
Morningstar Advisor - December/January 2010 - 57
Morningstar Advisor - December/January 2010 - 58
Morningstar Advisor - December/January 2010 - Are Utilities’ Dividends Worth the Worry?
Morningstar Advisor - December/January 2010 - 60
Morningstar Advisor - December/January 2010 - 61
Morningstar Advisor - December/January 2010 - High-Confidence Stock Picks
Morningstar Advisor - December/January 2010 - 63
Morningstar Advisor - December/January 2010 - Long-Short Funds That Pass a Simple Stress Test
Morningstar Advisor - December/January 2010 - 65
Morningstar Advisor - December/January 2010 - Mutual Fund Analyst Picks
Morningstar Advisor - December/January 2010 - 67
Morningstar Advisor - December/January 2010 - 68
Morningstar Advisor - December/January 2010 - 69
Morningstar Advisor - December/January 2010 - 50 Most Popular Equity ETFs
Morningstar Advisor - December/January 2010 - 71
Morningstar Advisor - December/January 2010 - 72
Morningstar Advisor - December/January 2010 - Undervalued Stocks
Morningstar Advisor - December/January 2010 - 74
Morningstar Advisor - December/January 2010 - 75
Morningstar Advisor - December/January 2010 - VA Sales See Some Recovery
Morningstar Advisor - December/January 2010 - 77
Morningstar Advisor - December/January 2010 - 78
Morningstar Advisor - December/January 2010 - New at Morningstar
Morningstar Advisor - December/January 2010 - I Read the News Today, Oh Boy
Morningstar Advisor - December/January 2010 - Cover3
Morningstar Advisor - December/January 2010 - Cover4
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