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Top Fund Managers Named

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Morningstar recently announced its U.S. Fund Manager of the Year award winners for 2014—featuring managers with Primecap Management, JPMorgan, Western Asset, Robeco Boston Partners and Dodge & Cox.

Morningstar selected managers who not only delivered impressive performance in 2014 but also showed excellent long-term risk-adjusted returns in five categories: domestic stock, international stock, fixed income, alternatives and allocation.

Domestic Stock

Morningstar awarded the Domestic-Stock Fund Manager of the Year award to the team from Primecap, which includes Theo Kolokotrones, Joel Fried, Al Mordecai, Mohsin Ansari and James Marchetti. The team runs three Primecap funds and three sub-advised Vanguard funds: Primecap Odyssey Aggressive Growth (POAGX), Primecap Odyssey Growth (POGRX), Primecap Odyssey Stock (POSKX), Vanguard Capital Opportunity (VHCOX), Vanguard Primecap Core (VPCCX) and Vanguard Primecap (VPMCX).

According to Morningstar, in 2014, all six funds under the Primecap team generated returns greater than 13.5%, ranking in the 11th percentile or better in their categories. Four of the six funds finished in the top 1% of their categories.

Three of the managers have more than $1 million invested in each of the six funds, and two managers have between $100,000 and $500,000 invested in each. Jon Hale, Morningstar’s director of manager research for North America, called the long-term record of these winning Primecap funds “outstanding.”

“The team has made a lot of money for many people at a low cost,” Hale said in a statement. “All six funds place in the top 5% of their categories over the trailing 10-year period, and Vanguard Primecap and Vanguard Capital Opportunity have 15-year records that respectively rank in the top 2% and top 1% of the large-growth category.”

The Primecap team previously won Morningstar’s Domestic-Stock Fund Manager of the Year award in 2003 for Vanguard Primecap and Vanguard Capital Opportunity.

Charles Pohl, Diana Strandberg and team with Dodge and Cox International Stock (DODFX) were awarded Morningstar’s international-stock fund manager of 2014. The nine-person Dodge and Cox International Stock policy committee runs this fund, and each of the members has been with Dodge and Cox for more than a decade. The team also won this award in 2004.

In fixed income, Ken Leech, Carl Eichstaedt and Mark Lindbloom with Western Asset Core Bond (WACSX) and Western Asset Core Plus Bond (WAPSX) were awarded top honors by Morningstar.

“The performance of Leech, Eichstaedt and Lindbloom really stood out in 2014, even as the Federal Reserve’s quantitative easing program ended, long-term bond yields continued to fall, and a sell-off occurred in the broader emerging-markets space,” Hale said in a statement. “Over the last few years, the team has deftly steered through rocky periods in the bond market.”

The Western Asset Core Bond and Western Asset Core Plus Bond bounced back from losses in 2008 to both land in the top decile of the Morningstar intermediate-term bond category over the past five years.

Morningstar named Robert T. Jones and Ali Motamed with Boston Partners Long/Short Equity (BPLSX, BPLEX) as the alternatives fund manager of the year.

Both Jones, who took the reins at Boston Partners Long/Short Equity in 2004, and Motamed, who was named a portfolio manager in 2013 after being with the fund since 2003, are committed to the strategy. According to Morningstar, each has invested more than $1 million.

“The management team isn’t afraid to make drastic moves to benefit fund shareholders,” Hale said of Motamed and Jones. The firm has a history of closing funds before becoming too unwieldy, and Boston Partners Long/Short Equity has been closed to new investors since 2010.

For the first time, a target-date fund series has won Morningstar’s Allocation Fund Manager of the Year award. Morningstar awarded top allocation fund honors to Anne Lester and the team with JPMorgan SmartRetirement Target-date Series. Lester has led the JPMorgan Smart Retirement team since the series’ inception in 2006, and all of the fund’s managers have spent their investment careers at JPMorgan.

In 2014, each fund in the series returned more than 5%, and the three-year annualized return is between 7% and 17% for each fund.

“In 2014, its funds, on average, ranked in the 8th percentile of their respective peer groups and outperformed their category averages by 2.2 percentage points,” Hale said in a statement. “Since the series’ inception, the average rank of its funds has never fallen into the bottom third on a calendar-year basis.”

The Morningstar Fund Manager of the Year awards were established in 1988 to recognize portfolio managers who demonstrate excellent investment skill and the courage to differ from the consensus to benefit investors. Winners are chosen based on Morningstar’s proprietary research and in-depth evaluation by its manager research analysts.

To qualify for the award, nominated funds must be Morningstar Medalists—a fund that has garnered a Morningstar Analyst Rating of Gold, Silver or Bronze.


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