Morningstar Announces 2012 U.S. Fund Manager of the Year Award Winners
CHICAGO, Jan. 3, 2013
CHICAGO, Jan. 3, 2013 /PRNewswire/ -- Morningstar, Inc. (NASDAQ: MORN), a
leading provider of independent investment research, today announced its 2012
U.S. Fund Manager of the Year award winners. The awards acknowledge managers
who not only delivered impressive performance in 2012, but also excellent
long-term risk-adjusted returns, and who have been good stewards of fund
shareholders' capital. This year, Morningstar introduced new awards for two
types of strategies—allocation and alternatives—in addition to domestic stock,
international stock, and fixed income. To recognize outstanding fund managers
each year, Morningstar selects leaders in each type of strategy. The 2012 Fund
Manager of the Year award winners in the United States are:
Domestic-Stock Fund Manager of the Year:
Bill Frels and Mark Henneman, Mairs & Power Growth (MPGFX)
International-Stock Fund Manager of the Year:
Rajiv Jain, Virtus Foreign Opportunities (JVIAX) and Virtus Emerging Markets
Fixed-Income Fund Manager of the Year:
Mark Kiesel, PIMCO Investment-Grade Corporate Bond (PIGIX)
Alternatives Fund Manager of the Year:
The team of Eric Newman, Kevin Gates, Larry Eiben, Richard Gates, Chao Chen,
and Yan Liu, TFS Market Neutral (TFSMX)
Allocation Fund Manager of the Year:
David Giroux, T. Rowe Price Capital Appreciation (PRWCX)
"Despite a high level of economic and political uncertainty this past year,
broad swaths of the market performed better than many investors would have
expected, and each of our fund managers of the year have added value relative
to their own benchmarks and broader peer groups, not just in 2012 but over the
long haul," said Scott Burns, director of North American fund research for
Morningstar. "We introduced awards for fund managers overseeing allocation and
alternative strategies this year to recognize the growing investor interest in
these areas. Interest in strategies using multiple asset classes has grown
over the past 20 years, especially with the emergence of target-date funds and
more flexible, go-anywhere funds pursuing a range of different goals. Assets
in funds employing alternative strategies rose about 21 percent in 2011, and
then another 16 percent through November 2012."
Domestic-Stock Fund Manager of the Year: Bill Frels and Mark Henneman, Mairs &
Power Growth (MPGFX)
At Mairs & Power Growth, Bill Frels and Mark Henneman have produced one of the
best long-term records of any large-blend fund. Since Frels became co-manager
in 1999, the fund has beaten all but one of its large-blend category peers and
trounced the S&P 500 with an 8.2 percent annualized gain through year-end
"The managers follow an extremely patient approach—of the fund's top 25
holdings, 18 were bought in the 1990s and 17 of those have remained in the
portfolio for at least 10 years," said Michael Herbst, director of active fund
research for Morningstar. "The managers' success stems from a deep
understanding of their holdings and their preference for companies that can
increase earnings in difficult economic environments. While the basic
materials and industrials sectors were two of the worst-performing sectors in
2012, the fund's holdings in those sectors boosted its returns, including
paint and coatings firm Valspar, cleaning-products maker Ecolab, and chemicals
firm H.B. Fuller."
The $2.5 billion fund has a Morningstar Analyst Rating™ of Silver, the
company's second-highest Medalist rating, along with a Morningstar Rating™ of
5 stars for its past risk-adjusted performance. Among all the 2012 nominees
for Domestic-Stock Fund Manager of the Year, Mairs & Power Growth offers the
lowest fees with a 0.72 percent expense ratio.
International-Stock Fund Manager of the Year: Rajiv Jain, Virtus Foreign
Opportunities (JVIAX) and Virtus Emerging Markets Opportunities (HEMZX)
Rajiv Jain has managed Virtus Foreign Opportunities since 2002, and Virtus
Emerging Markets Opportunities since 2006. He follows a high-conviction
approach regardless of market trends and is willing to hold portfolios that
look very different than the benchmark. The strategy has served him well—his
funds have landed in the top decile of performance for most periods under his
management. Through Dec. 31, 2012, the $1.3 billion JVIAX posted a 11.1
percent annualized return for the 10-year period while HEMZX, with $6.7
billion in assets, had a 17.4 percent annualized return for the same period.
"Jain's approach has produced attractive risk-adjusted returns over his
tenure, especially compared with other emerging-markets funds. His relatively
high exposure to Indian stocks worked well for the fund in both 2011 and 2012
despite a lagging Indian market in 2011," Herbst said. "He looks for companies
with strong balance sheets, steady growth rates, and straightforward business
models, with a heavy tilt to consumer-product companies, which have helped him
weather market downturns."
He has more than $1 million invested in the two funds combined. JVIAX and
HEMZX have a 1.47 percent and 1.62 percent expense ratio, respectively. Both
funds have a Silver Analyst Rating and a 5-star Morningstar Rating for
risk-adjusted performance. Jain is employed by Vontobel Asset Management,
which sub-advises the Virtus funds.
Fixed-Income Fund Manager of the Year: Mark Kiesel, PIMCO Investment-Grade
Corporate Bond (PIGIX)
Mark Kiesel is the 10-year manager of one of the best-performing corporate
bond funds over both long- and short-term periods: the fund has an 11.1
percent three-year annualized return and a 10.7 percent five-year annualized
return. The fund's average annual gain of 8.2 percent since he joined in
December 2002 through April 2012 is the second-best showing in the
intermediate-term bond category. For 2012, the $10.2 billion fund gained 15
"Kiesel's long-standing bet on banks paid off this year, along with his
selective exposure to companies in cyclical industries. He balances PIMCO's
overall firm views on the global economy with his ability to pick securities
from the bottom up," Herbst said. "There's a lot of complexity to the
techniques employed in the portfolio, and Kiesel has executed them well. He
looks for margins of safety but doesn't shun credit risk—the fund's exposure
to contingent capital securities issued by Lloyds TSB, a more esoteric and
riskier type of holding, was one of his best-performing positions this year."
The fund has a Silver Analyst Rating, a 5-star Morningstar Rating for
risk-adjusted performance, and an expense ratio of 0.5 percent. In 2010,
Kiesel was nominated in the same category.
Alternatives Fund Manager of the Year: The team, TFS Market Neutral (TFSMX)
TFS Market Neutral is one of the oldest funds in the market-neutral category,
with an eight-year track record and $1.8 billion in assets. In 2012, the fund
achieved the highest absolute return of 7.8 percent in its category, and its
risk-adjusted return (daily annualized Sharpe ratio) ranked fourth. The fund's
quantitative small-cap equity-focused strategy also produced a significant
positive alpha relative to the Russell 2000, as it has done in all but two
years since inception.
"It's unusual for a quantitative fund to have such consistent, positive
performance, but the team behind the models is really what drives results. The
six listed portfolio managers come from quantitative backgrounds and are
supported by a small group of analysts, programmers, and traders who regularly
help test existing models and build new ones," said Nadia Papagiannis, CFA,
director of alternative funds research for Morningstar. "The team is also
always looking for new strategies, and performs back-testing analysis at least
once a year, or if a strategy performs unexpectedly."
TFS Market Neutral is currently the only alternative mutual fund with a Gold
Analyst Rating. The fund has a 5-star Morningstar Rating for risk-adjusted
performance, and a 2.47 percent expense ratio. Five of the six portfolio
managers on the team are equity partners at the employee-owned firm, which
requires management to invest 50 percent of their liquid net worth in TFS'
This is the first year Morningstar has awarded an Alternatives Fund Manager of
the Year award. Morningstar defines alternative investments as those that do
not fit neatly in its traditional equity or fixed-income style boxes—either
because they invest in different asset classes, take long and short positions,
or because they are illiquid.
Allocation Fund Manager of the Year: David Giroux, T. Rowe Price Capital
David Giroux joined the fund in 2006, and since then has beaten 97 percent of
moderate-allocation category peers, delivering top-decile returns on a
risk-adjusted basis. Giroux follows a straightforward asset allocation
approach, generally investing 55-65 percent of assets in equities and the rest
in a mix of fixed income and cash. For most of his tenure, Giroux has favored
convertible bonds, and more recently, leveraged loans, in the fixed-income
segment of the fund.
"Giroux's stellar performance in 2012 came from multiple areas, including his
stock selection and a strong showing from the fund's bank loan stake. Top
holdings across multiple sectors, such as Thermo Fisher Scientific, Walt
Disney, and Invesco, fueled the fund's gains in 2012, but Giroux has
successfully taken full advantage of T. Rowe Price's deep research operation
over the long term, too," said Laura Lutton, director of fund-of-funds
research for Morningstar. "The $13.7 billion fund returned nearly 14.7 percent
for the year, and remains an excellent core holding."
The fund has earned a Gold Analyst Rating and has a 5-star rating for
risk-adjusted performance. Giroux has more than $1 million invested in the
fund, and the fund's 0.71 percent expense ratio is below average for the
This is the first year Morningstar has awarded an Allocation Fund Manager of
the Year award. Fund managers considered for this award must run funds that
combine at least two asset classes in a single portfolio.
Established in 1988, the Morningstar Fund Manager of the Year award recognizes
portfolio managers who demonstrate excellent investment skill and the courage
to differ from the consensus to benefit investors. To qualify for the award,
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
risk-adjusted performance and of aligning their interests with shareholders'.
Nominated funds must be Morningstar Medalists—a fund that has garnered a
Morningstar Analyst Rating of Gold, Silver, or Bronze. The Fund Manager of the
Year award winners are chosen based on Morningstar's proprietary research and
in-depth qualitative evaluation by its fund analysts.
All year-end figures cited in this press release are preliminary and subject
For Morningstar's article about the winners, go to:
http://www.morningstar.com/goto/fmoy2012. For the complete list of past and
current winners, go to: http://corporate.morningstar.com/FMOYhalloffame.
About Morningstar, Inc.
Morningstar, Inc. is a leading provider of independent investment research in
North America, Europe, Australia, and Asia. The company offers an extensive
line of products and services for individuals, financial advisors, and
institutions. Morningstar provides data on more than 385,000 investment
offerings, including stocks, mutual funds, and similar vehicles, along with
real-time global market data on more than 8 million equities, indexes,
futures, options, commodities, and precious metals, in addition to foreign
exchange and Treasury markets. Morningstar also offers investment management
services through its registered investment advisor subsidiaries and has
approximately $195 billion in assets under advisement and management as of
Sept. 30, 2012. The company has operations in 27 countries.
Analyst Ratings are subjective in nature and should not be used as the sole
basis for investment decisions. Analyst Ratings are based on Morningstar's
current expectations about future events and therefore involve unknown risks
and uncertainties that may cause Morningstar's expectations not to occur or to
differ significantly from what was expected. Morningstar does not represent
its Analyst Ratings to be guarantees nor should they be viewed as an
assessment of a fund's or the fund's underlying securities' creditworthiness.
©2013 Morningstar, Inc. All Rights Reserved.
Nadine Youssef, +1 312 696-6601 or firstname.lastname@example.org
SOURCE Morningstar, Inc.
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