The 2004 Morningstar Investment Conference kicks off this week as portfolio managers and mutual fund sales personnel head to the Windy City to discuss picking stocks in a tough investing environment and various distribution issues facing the industry in the wake of the scandal.
The obvious topics that will be discussed at this years gala will include rising expenses for mutual funds, the inadequacy of fund boards and the inherent conflict that exists between fund owners and investors in the fund management company. While these issues are nothing new in the fund business, they have garnered much more attention in the wake of the trading scandal that unfolded last September.
Attendees will also hear from large-cap portfolio managers Bill Nygren of Oakmark Investments and T. Rowe Price s Bob Smith regarding the difficult investing environment and what to expect from blue-chip stocks during the coming year. Given last years strong broad-based rally both at home and abroad, it is more difficult to find investment ideas, according to Kunal Kupoor, Morningstars director of fund analysis.
Another are of focus is how funds are sold and the complexity of expense structures. With distribution costs on the rise, not to mention hidden, investors have become confused as to what services theyre paying for, Kupoor said. Many investors also own inappropriate share classes because brokers receive fatter commissions for pushing them on their clients.
Keynote speakers Christopher Davis, portfolio manager and CEO of Davis Advisors, and John Montgomery, founder of Bridgeway Capital Management , will illustrate how their firms products are priced in a way that reflects the true cost borne by their shareholders.
FPAs Bob Rodriguez and GMOs Jeremy Grantham are expected to argue that investors must pare their expectations and better position their portfolios in such a tough environment. Another panel will discuss whether funds invest in commodities and real estate are more volatile than theyve been in the past and if investors should limit their exposure to those asset classes.
Other high-profile names that will appear as part of a panel discussion include investor advocate Mercer Bullard and Bob Pozen, independent chairman of MFS Investments. The duo will put forth a series of ideas about how to restore investor confidence after the scandal and how to stamp out future problems before they spread.