Each year, Morningstar gives its Fund Manager of the Year Award in three categories, seeking to to showcase managers who demonstrate excellent investment skill, but are also willing to go against the consensus in order to benefit investors. The three winners – in domestic stock, international stock, and fixed income – for 2006 were able to do this and more, Morningstar said; they also benefited investors by delivering straightforward communication, keeping costs down, and closing funds to new investments in a timely manner.
The winners are:
- Domestic-Stock Fund Manager of the Year:
- O. Mason Hawkins and Staley Cates
- Longleaf Partners Fund (LLPFX), Longleaf Partners Small Cap (LLSCX)
- International-Stock Fund Manager of the Year:
- David Herro
- Oakmark International (OAKIX), Oakmark International Small Cap (OAKEX)
- Fixed-Income Fund Manager of the Year:
- Jeffrey Gundlach
- TCW Total Return Bond (TGLMX)
’The managers at Longleaf, Oakmark, and TCW have demonstrated their smart investing strategies through strong long-term performance and consistently put the interests of investors first,’ said Christine Benz, director of mutual fund analysis for Morningstar, in a press release.
Staley Cates and Mason Hawkins of Longleaf look for deep discounts in managing their portfolios, Morningstar said; seeking companies trading at a discount of 40% or more to their estimated worth. They are not afraid to load up on such firms, and that has served them well, since many of those investments enjoyed significant gains in 2006. Further, Longleaf has good governance practices and Cates and Hawkins show a dedication to their investors through clear communication and “closing both funds to prevent inflows from slowing them down,’ Benz said, in the release.
David Herro has run the International and International Small Cap funds since their inception in 1992 and 1995, respectively, and he also serves as Oakmark’s chief investment officer for international equities. In managing those funds, Morningstar noted that Herro runs concentrated, value-conscious portfolios, and is not afraid to look to emerging-markets. Moreover, Morningstar said that Herro’s interests are aligned with shareholders’, evidenced by his own investment of $1 million in each of his funds. Further, the decision to close the Oakmark International Small Cap fund, demonstrates a committment to current shareholders, Morningstar said.
Jeffrey Gundlach was nominated as a fixed-income manager of the year contender the past two years, and has been managing the portfolio since its inception in 1993, giving it “an outstanding long-term record,’ Morningstar said.In the TCW Total Return Bond Fund, he focuses on mortgage-backed securities and has managed to generate significant returns above the typical intermediate-term bond fund without increasing risk, Morningstar said. Further, the bond fund carries one of the lowest expense ratios of any non-index, non-institutional bond fund, and, with a minimum investment of $2,000, is accessible to smaller individual investors.
Runners-upThe runners-up in each category, receiving Fund Manager of the Year honors, were:
- Domestic-Stock: Bruce Berkowitz, lead manager of the Fairholme Fund (FAIRX
- International-Stock: Hakan Castegren and his team at Harbor International (HAINX)
- Fixed-Income: Dan Fuss and Kathleen Gaffney, co-managers of the Loomis Sayles Bond Fund (LSBRX)
The winners of the award are chosen based on Morningstar’s proprietary research and in-depth evaluation by its fund analysts.To be considered for the Morningstar Fund Manager of the Year awards, which were begun in 1988,managers’ funds must have not only posted impressive returns for the year, but the managers also must have a record of delivering outstanding long-term performance and of aligning their interests with shareholders’, the company said.