I mentioned DGT in a post about a month and a half ago because Doug Fabian made a good call about foreign but implemented the idea poorly with DGT.
DGT is comprised of the 50 largest companies in the world. 63% of the fund is US and the rest is foreign. The Morningstar article seems to like the fund but it is not that committal. It does point out the DGT has a competitive yield. It yields 2.23%.
The report strikes me as wildly incomplete, but only about two minutes away from being useful.
This fund owns mega cap stocks. The average market cap of DGT is $145 billion. Mega caps have been lagging for years. This fund will continue to lag until mega caps rotate back in to favor which could be a while.
This is a three year chart that shows DGT lagging EFA by a lot and SPY by a little. It would have been useful if the Morningstar would have pointed out that an investor would have been better off with 63% in SPY and 37% in EFA, the domestic/foreign weight of DGT.
This did not come up but a mention about the reason for the lag (I think it was cap size) and some forward looking analysis about why DGT might not lag anymore, if that is what they think.
The report as it reads is close to useless.
2 comments:
I use Morningstar only for its raw data especially in mutual funds. The writers at Morningstar tend to offer too much personal(mistaken as professional)opions than the data would suggest. Till this day Morningstar has yet to come up with any good risk measurements for its funds or stocks. I would like you to write how you personally balance the reward with risk for your clients. After reading your blog for a while, I sense you probably know this area better than most people. I would appreciate if you can share some idea with us.
G
What is SPY that you refer to on the chart
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