Morningstar announced the winners of its 2010 Fund Manager of the Year awards on Wednesday. They are Robert Goldfarb and David Poppe of Sequoia Fund (SEQUX) for top domestic-equity manager, Brent Lynn of Janus Overseas (JAOSX) for international-stock manager, and Michael Hasenstab of Templeton Global Bond (TPINX) for fixed-income manager.
In 2010, the five-star Sequoia Fund had returns of 19.5%, while the four-star Janus Overseas moved up 19.3%. The five-star Templeton Global Bond fund rose 12.7% last year.
“The markets were good to mutual funds in 2010, as most managers continued to climb their way back from losses incurred between 2007 and early 2009,” wrote Morningstar director of fund analysis Karen Dolan, CFA, in her online report on the winners.
“Growth led value. Small caps led large caps. Emerging markets shone brighter than many developed ones. And equities were well ahead of fixed-income investments,” she explained.
The Sequoia Fund has a low turnover, below 15%, according to Dolan. It also has a handsome stake in Berkshire Hathaway (BRK.A). But investors can have trouble getting their hands on shares as it’s not offered on the major broker-dealer platforms.
The portfolio typically holds between 15 and 30 stocks, according to Morningstar, and its performance has been consistently strong, with a15-year annualized return of 9.7%. During the market downturn in 2008, the fund lost 27% while the category dropped 38%.
In addition, Goldfarb has more than $1 million invested in the fund, and Poppe has between $100,000 and $500,000 in it. Sequoia was closed to new investors for 25 years but reopened in 2008.
Janus Overseas has a five-year average return of 13.6%. Recent holdings include Ford Motor (F) and Delta Airlines (DAL), and the fund invests about 20% of its assets in U.S.-based companies.
“[Portfolio manager] Lynn's strategy is more aggressive than the typical core international offerings that focus mostly on developed markets, but it has proved resilient. His keen focus on growth and stock-specific research has led him to favor prospects in emerging markets, especially India, Brazil, and China,” Dolan said, in a press release.
“Most remarkable, though, is just how well Lynn has managed those risks. The fund has posted an annualized gain of 13.6 percent over the past five years, a period that includes a very difficult 2008,” explained Dolan.
Lynn has more than $1 million invested in the fund, and its expense ratio has remained below 1% while the category average tops 1.5%.
Templeton Global Bond has stressed emerging markets over developed economies and has long-term positions in Brazil, South Korea and Malaysia. He made a bad bet on the Japanese yen earlier this year, Dolan notes in her report, but made enough good bets to end the year “with a comfortable lead.”
The fund’s 10-year annualized return of 11.7% is nearly double that of its category, and its results were similar for the five-year period, says Morningstar.
“By shying away from overleveraged developed economies, the fund's profile differs from traditional benchmarks and much of the competition,” Dolan said in a press release.
“Hasenstab instead focuses on the bonds and currencies of countries with low debt levels and positive growth prospects. He has proved to be one of the few managers who can execute a global bond strategy this well and this consistently," she added.
The portfolio manager has invested more than $1 million in this fund.