2008: A Weird Year to Be Fund Manager of the Year

Fundtracker Morningstar unveiled its mutual fund managers of the year today. This is no popularity contest. The fund managers that win are consistent, long-term performers.

But considering that 2008 is a year that mutual fund investors would like to forget, it seems odd to anoint a stockpicker as “best in show.” The Domestic-Stock Manager of the Year is value investing guru Charlie Dreifus of Royce Special Equity, who saw his portfolio decline nearly 20% in 2008. But it’s on with the show at Morningstar, which rationalizes their decision this way:

Why give out awards when everyone’s year-end statement is swimming in red ink? Because limiting losses was difficult to do, yet incredibly valuable. Consider that our winning Domestic-Stock Manager of the Year lost just under 20% when the stock market as a whole lost 37%…Our Manager of the Year award recognizes much more than a single year’s performance. It recognizes long-term performance and strong stewardship as well. In fact, it’s more a hall of fame than a recommendation list.

I hope I am remembering this correctly, but I believe that that in years past, Morningstar hasn’t given out awards in certain categories. While Dreifus is a spectacular manager, and Royce is a terrific money management firm, it must feel weird to be recognized for not losing as much money as the competition.

What do you think? Does Dreifus deserve this award for 2008? Would you have skipped the stockpicking award for the year, or do you have another candidate you would have preferred?

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