Morningstar announced its 2012 U.S. Fund Manager of the Year award winners in early January, after releasing the names of nominees by category in late December. According to the Chicago-based research firm, 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, the mutual fund research firm introduced new awards for two types of strategies—allocation and alternatives—in addition to domestic stock, international stock and fixed income. The 2012 Fund Manager of the Year award winners are as follows:
Domestic-Stock Fund Manager of the Year: Bill Frels and Mark Henneman, Mairs & Power Growth (MPGFX).
In its award-winner announcement, Morningstar says that Mairs & Power Growth’s, 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 firm notes, the fund has beaten all but one of its large-blend category peers and trounced the S&P 500 with an 8.2% annualized gain through 2012.
Other nominees for this award were American Funds New Economy team (ANEFX) and Timothy Hartch and Michael Keller of BBH Core Select (BBTEX). “Managers Timothy Hartch and Michael Keller set this fund apart in several ways,” writes Morningstar senior fund analyst George Carlson. “They run a concentrated portfolio of roughly 30 stocks, ignore the sector and individual stock weightings of the fund’s S&P 500 benchmark, and focus heavily on downside protection.”
Steve Wymer of the Fidelity Growth Company (FDGRX) is “a rarity,” says Carlson, who adds that he is an aggressive-growth manager who has “survived and thrived through multiple bubbles and bear markets.”
“Although he willingly pays up for rapid growers and will invest heavily at times in risky biotech firms, Wymer has lasted 16 years at this fund by exhibiting patience and conviction,” Carslon adds.
A long-term perspective was a distinction of category winner Mairs & Power Growth (MPGFX). “Of the fund’s top 25 holdings (which comprise most of its assets), 18 were bought in the 1990s and only one hasn’t been held for at least 10 years,” according to Morningstar.
Bill Nygren of Oakmark (OAKMX) and Oakmark Select (OAKLX) rounded out the list of nominations in this category.
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,” according to Morningstar. The strategy has served him well, according to Morningstar. His funds have landed in the top decile of performance for most periods under his management.
Other nominations in this category were George Evans of Oppenheimer International Growth (OIGAX), David Samra and Daniel O’Keefe of Artisan International Value (ARTKX), as well as Mark Yockey of Artisan International (ARTIX) and Artisan International Small Cap (ARTJX).
Fixed-Income Fund Manager of the Year: Mark Kiesel, PIMCO Investment-Grade Corporate Bond (PIGIX)
Industry observers were not surprised that PIMCO won in the fixed-income category. Mark Kiesel is the 10-year manager of “one of the best-performing corporate bond funds over both long- and short-term periods,” according to Morningstar. The firm notes the fund has an 11.1% three-year annualized return and a 10.7% five-year annualized return.
Additional fund managers nominated in this category were Steve Smith, David Hoffman, Brian Hess, and Jack McIntyre of Legg Mason Brandywine Global Opportunities Bond (GOBIX), Peter Palfrey and Rick Raczkowski of Loomis Sayles Core Plus Bond (NEFRX), Tad Rivelle, Stephen Kane and Laird Landmann, Metropolitan West Total Return Bond (MWTRX), Mark Kiesel of PIMCO Investment Grade Corporate Bond (PIGIX), and Mark Egan, Tom Fink, Todd Thompson and Steve Vincent of Scout Core Plus Bond (SCPZX).
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).
FS Market Neutral is one of the oldest funds in the market-neutral category, according to Morningstar, with an eight-year track record and $1.8 billion in assets. In 2012, the fund achieved the highest absolute return of 7.8% in its category, and its risk-adjusted return ranked fourth.
Michael Aronstein of MainStay Marketfield (MFLDX) also was nominated, along with the teams that lead the Calamos Market Neutral Income (CVSIX) and the TFS Market Neutral (TFSMX).
Allocation Fund Manager of the Year: David Giroux, T. Rowe Price Capital Appreciation (PRWCX).
David Giroux joined the fund in 2006, and since then has beaten 97% 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% of assets in equities and the rest in a mix of fixed income and cash.” For most of his tenure, Morningstar concludes, Giroux has favored convertible bonds, and more recently, leveraged loans, in the fixed-income segment of the fund.
Additional nominees for this award included the portfolio teams of Dodge & Cox Balanced (DODBX) and JPMorgan SmartRetirement Target-Date Series, along with Rob Arnott of PIMCO All Asset (PAAIX) and PIMCO All Asset All Authority (PAUIX), David Giroux of T. Rowe Price Capital Appreciation (PRWCX), and Jerome Clark of the T. Rowe Price Retirement Target-Date Series.
Also in early January, Morningstar named Merrill A. (Pete) Miller Jr., CEO of Houston-based National Oilwell Varco, as its 2012 CEO of the Year. The research firm says this award is meant to recognize a chief executive who “exhibits exemplary corporate stewardship, demonstrates independent thinking, creates lasting value for shareholders, and has put his or her stamp on an industry.”
The two other nominees for the group’s 2012 CEO of the Year award were George Paz of Express Scripts and J. Michael Pearson of Valeant Pharmaceuticals International.
“This year’s nominees have been instrumental in transforming their companies from small players or those with few competitive advantages to leaders in their industries,” said Paul Larson, chief equities strategist and editor of Morningstar StockInvestor. “We selected Miller, who has served as CEO of National Oilwell Varco since 2001, as our winner this year for the rare combination of excellence he’s demonstrated across all three facets of a chief executive’s job—strategic insights, capital allocation, and execution.”
Johm Sullivan contributed to this report.