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Morningstar Announces Allocation Fund Manager of the Year Nominees

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Morningstar finished its “big reveal” on Wednesday, closing out the announcement of its 2012 Manager of the Year nominees with the allocation fund manager hopefuls.

For those keeping score, the latest announcement followed the domestic-stock fund category last Thursday, the international-stock fund category on Friday, the fixed-income manager of the year nominees on Monday and the alternative investment nominees on Tuesday.

“The skippers of asset-allocation funds have earned their own Fund Manager of the Year category because they’ve gone well beyond the 60%/40% stock/bond mix to demonstrate portfolio-construction skills that go beyond picking and combining individual securities,” writes Laura Pavlenko Lutton, director of fund-of-funds research at Morningstar, in the announcement. “They have effectively combined asset classes to help investors meet big goals, whether they’re saving for retirement or aiming to lower volatility in a broader portfolio.

The 2012 nominees are:

  • Team at Dodge & Cox Balanced (DODBX)–Patience paid off in 2012 for the managers of this moderate-allocation fund, Lutton notes. “The seasoned team has the flexibility to alter its stock/bond mix, and in recent years, it has kept its equity stake at more than 70% of its assets,” she writes. “That’s near the maximum of its 25%-75% equity range and more than 10 percentage points ahead of its typical category peer.”
  • Team at JPMorgan SmartRetirement Target-Date Series–They had headwinds, but prevailed. “This series of funds for retirement investors has been making a name for itself. The management team, led by Anne Lester, arguably operated with two disadvantages in 2012,” according to Lutton. “For one, its allocation to equities is at or below the industry norm across the series of funds, and its lineup of underlying funds lacks the star power seen at other key competitors.” Even so, she notes Lester has “picked from the best of JPMorgan’s lineup and in 2012 correctly tilted the series’ asset allocation toward larger-cap stocks and high-yield bonds to push returns well ahead of the pack.
  • Rob Arnott of PIMCO All Asset (PAAIX) and PIMCO All Asset All Authority (PAUIX)–“These funds have made the most of their broad mandates. Under Rob Arnott’s leadership, these world-allocation funds draw on PIMCO’s strong inventory of funds with an absolute return mandate–stay 5 to 6.5 percentage points ahead of the Consumer Price Index over a full market cycle.”
  • David Giroux of T. Rowe Price Capital Appreciation (PRWCX)–At T. Rowe Price Capital Appreciation, “David Giroux runs a fund with a straightforward asset-allocation mandate and a sophisticated menu of investments,” Lutton explains. “This fund avoids market-timing and sometimes keeps a stash of cash, but its success in 2012 owes in part to an equity-heavy approach earlier in the year.”
  • Jerome Clark of the T. Rowe Price Retirement Target-Date Series–Manager Jerome Clark skippers a $77 billion target-date series, T. Rowe Price Retirement, that’s “unapologetically equity-heavy,” she concludes. “T. Rowe maintains that retirement investors need more exposure to stocks to overcome the risk that they’ll outlive their savings. This stance stung the series in 2008’s market crash, but its funds have recovered nicely since.”


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