Tags: Benz | mutual | funds | risk

Morningstar's Benz: Mutual Funds for Those Willing to Take Some Risk

By    |   Saturday, 22 November 2014 11:49 AM

Many financial commentators have railed at investors over the last few years for venturing out too far on the risk curve.

But, "all of the best investors take calculated risks," Christine Benz, director of personal finance for Morningstar, writes on the firm's web site. "The key to their success is that they make sure they're getting compensated for whatever risks they take on."

She lists several mutual funds that in the past have amply compensated investors for their risks.
These funds have generally slid more than their peers in prior market downturns, but Morningstar analysts believe they will perform strongly in the future.

When it comes to stock funds, Morgan Stanley Institutional Growth (Ticker: MSEGX) and Oakmark Select (OAKLX) were the only domestic-oriented funds to make the grade.

Morgan Stanley Institutional is a growth fund with a disciplined strategy and excellent long-term results, Benz says. Meanwhile Oakmark Select's "quality- and valuation-conscious approach has been vindicated over longer time frames," she writes.

If you're looking to jump way out on the risk curve, you can invest in whiskey.

The first whiskey index was created six years ago, according to CNNMoney, and since then top single malts have soared in value by more than 660 percent. That compares to 143 percent for the S&P 500 index during that period.

"Whiskey as an investment is being driven by an escalating international demand, combined with an ever-decreasing supply of rare and aged single malt," whiskey entrepreneur Stephen Notman told CNNMoney.

Of course, there are plenty of pratfalls to investing in collectibles like whiskey. First, they aren't necessarily true "alternative" investments. They are often highly correlated to stock prices.

Second, the market for collectibles is frequently illiquid. You might not be able to unload that bottle of booze so easily when the desire or need strikes you.

As a result, experts advise buying collectibles only when you have a passion for the items. Purchase the whiskey because you enjoy looking at it etc., not because you think you can get rich off of it.

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All of the best investors take calculated risks: The key to their success is that they make sure they're getting compensated for whatever risks they take on.
Benz, mutual, funds, risk
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2014-49-22
Saturday, 22 November 2014 11:49 AM
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