"Thus, when accounting scandals hit and people lose faith in companies' risk controls, Royce Special Equity is a good place to be," Morningstar said.
The fund lost 19.5% in 2008, which was 1,400 basis points better than the category average. The fixed-income managers of the year were Bob Rodriguez and Tom Atteberry of the FPA New Income Fund, who were credited with predicting the mortgage meltdown.
"From his perch in Los Angeles, Rodriguez had a good view of the insane housing speculation and the crazy mortgages behind them," Morningstar said.
The fund steered clear of risk before the meltdown hit in 2007, which cost it returns in the short run, but led to a gain of 4.3% in 2008. That's 920 basis points better than the average intermediate-term bond fund. "That's a remarkable feat in the bond world, where winners and losers are usually separated by 30 basis points," Morningstar said.
The international managers of the year were David Samra and Dan O'Keefe of the Artisan International Value Fund. They did an "outstanding job applying a deep-value strategy overseas," Morningstar said, adding that investment discipline limited their losses to 30.1% in 2008. "Although that's not pretty, it's a far sight better than the 47% loss posted by the average foreign small/mid-value fund and the 43% loss at MSCI EAFE," Morningstar said.
LTC Costs Up, But Increase Has Slowed
Long-term health care (LTC) price hikes have basically increased in line with inflation since 2002, according to a study of 2008 LTC costs by John Hancock Life Insurance Company. That's a slower average growth rate than during the 1990s, but LTC remains a pricey proposition that's only going to get pricier.
Last year, the average cost of a private nursing home room was $204 a day, or $74,460 annually, up an average of 3.2% per year since 2002. The average cost of a semiprivate nursing home room was $183 a day, or $66,795 annually, for an average annual increase of 2.7% during that period.
"In the 1990s, the costs of care, particularly nursing home care, rose at a far faster pace," said Marianne Harrison, president, John Hancock Long-Term Care Insurance. "Nevertheless, at this rate baby boomers are looking at spending a startling $750,000 to $1.25 million for a three- to five-year long-term care event 30 years from today."
The average monthly charge for an assisted-living facility in 2008 was $2,962, or $35,544 a year. That jumped an annual average of 4% since 2002. Meanwhile, the cost for home health aides last year was $19 an hour, a 1.4% average annual increase during that period.
Harrison suggests buying just the basic amount of coverage needed without a lot of frills, adding that a total benefit pool lasting three to five years with a daily benefit reflecting the current cost of care in the patient's area, along with a consumer price index-linked compound inflation option, should provide affordable coverage that will grow with time.