My 401(k) Mutual Funds: Part 4 of 6

Fourth installment of 401(k) mutual funds' reviews:

Oppenheimer International Bond Y OIBYX

Started In: 2004
Load: No
Yield: 7.23%
Annual Turnover: 68%
Size: $10 billion
Expense Ratio: 0.54%
Cost: $180 per $10,000 over 3 years
MS Stars: 5
Stewardship: C
Category: World Bond
Management: Arthur Steinmetz has managed the fund since inception.
Performance: This fund is new, but so far it has performed well. In 2007 it returned 14%, while 3-year annualized return is 10.49% which makes it #1 in its category.
Strategy: This fund invests primarily in sovereign debt and provides investors with a lot of emerging-markets exposure. The fund also takes on substantial developed and emerging-markets currency risk and makes substantial use of derivatives to take currency and country exposures. Interest-rate sensitivity is usually kept close to its benchmark's.
Lipper: The Fund seeks high total return by investing primarily in foreign debt securities.
Comments: Has 28% in Cash, which is probably a good thing. 44% is in AAA bonds, 17% in AA, 25% in A, and the rest lower-rated bonds. It has 274 holdings with 25% of assets in top 10. I looked at the A share version of this fund, which has a longer history to speak of. The fund (OIBAX) is ranked #1 for 3-year, 5-year, and 10-year returns! While #3 for 1-year returns. In the past 8 years it didn't have a single negative year and from looking at the chart, they fund may have had a bad year in 1998, but even though it was only about a 10% dip, so I'm definitely impressed with this fund's performance!

Third Avenue Real Estate Value TAREX

Started In: 1998
Load: No
Yield: 1.91%
Annual Turnover: 19%
Size: $ billion
Expense Ratio: 1.11%
Cost: $353 per $10,000 over 3 years
MS Stars: 4
Stewardship: NR
Category: Specialty-Real Estate
Management: Michael Winer has been the manager since inception.
Performance: This fund didn't have a negative year since its inception in 1998 until 2007 when it lost 8.4%. Overall, it has performed well with a 5-year return of 17% and 3-year return of 8%. But by looking at category ranking, I see that it's rather in the middle of the pack ranking between 18 and 33.
Strategy: Like other Third Avenue offerings, this one seeks companies that trade at a discount to management's estimate of net asset value. The manager favors REOCs over REITs because the former can reinvest cash flow back into the business for growth. The fund often stashes more than 60% of assets in its top 10 holdings, which means it's among the most concentrated in the category.
Lipper: The Fund seeks long-term capital appreciation by investing at least 65% of its assets in equity and debt securities of well-financed companies in the real state industry or related industries or in companies which own significant real estate assets at the time of investment. This fund's rates have skyrocketed in the past few years.
Comments: Has 5.6% in Cash. It has 59% of assets in top 10 holdings. This fund invests in Large (49%), Medium (30%), Small (9%), and Micro (9%) companies. Its investment style is Blend-Growth. It has a total of 40 holdings. This is an MS Analyst Pick. This fund's performance relative to its peers isn't overly impressive, but I like its steady performance until now. Could a worthwhile pick once the real estate will start making a comeback.

Vanguard Developed Markets Index VDMIX

Started In: 2000
Load: No
Yield: 2.85%
Annual Turnover: 7%
Size: $3.9 billion
Expense Ratio: 0.27%
Cost: $87 per $10,000 over 3 years
MS Stars: 4
Stewardship: B
Category: Foreign Large Blend
Management: It doesn't have a manager, it's an index.
Performance: The fund only has a 7 year history, which so far shows double digit losses in 2001 and 2002. Although returns in the subsequent 5 years were pretty good, I would venture a guess that this fund isn't designed to withstand bear markets all that well. 5-year return is 19% and 3-year return is 15%, ranking it #29 and #50, respectively, among peers.
Strategy: This is a passively managed fund of funds that invests all of its assets in Vanguard European Stock Index VEURX and Vanguard Pacific Stock Index VPACX, with the majority going to the Europe fund. Its goal is to track the performance of the MSCI EAFE Index. It has minimal exposure to emerging markets. It does not hedge its foreign-currency exposure.
Lipper: The Fund seeks to track the performance of the MSCI Europe, Australia, Far East (EAFE) Index. And this fund's assets, also, have skyrocketed lately.
Comments: The fund has virtually zero in Cash and is 98% invested in stocks. Most significant sector holdings are: Financial Services, Consumer Goods, and Industrial Materials. The fund is heavily invested in the UK (22%) and Japan (20%) as well as in France, Germany, Australia and Asia ex-Japan. Fund has only two holdings: Vanguard European Stock Index (70%) and Vanguard Pacific Stock Index (30%). Bottom line: not a bad offering, but not now and not if I have a choice of a better-performing peer.