Morningstar Fund Managers of the Year
Kurt Brouwer January 7th, 2008
Every year Morningstar gives out awards for the Fund Manager of the Year in three categories: Domestic Stock Fund; International Stock Fund; and Fixed Income Fund. This year we are happy to say that managers of funds we use took two out of the three awards [emphasis added below]:
Our 2007 Fund Managers of the Year (Morningstar, January 3, 2008, Christine Benz)
‘…Domestic-Stock Manager of the Year: Will Danoff
Fidelity Contrafund (FCNTX) and Fidelity Advisor New Insights (FNIAX)
International-Stock Managers of the Year: Hakan Castegren and Northern Cross Team
Harbor International (HAINX)Fixed-Income Manager of the Year: Bill Gross
PIMCO Total Return (PTTDX) and Harbor Bond (HABDX)…
We have not used the Fidelity Contrafund, so I will not go into detail on it other than to say it is an excellent fund. However, the other two Managers of the Year are portfolio managers for two mutual funds we have used for many years — Harbor International and PIMCO Total Return. Here is what the article wrote about Harbor International:
‘…Hakan Castegren took home our Fund Manager of the Year award back in 1996, and we’re happy to note that he and his team have continued to deliver great returns for investors over the subsequent decade. This year, we’re giving the award not just to Castegren but also to the team that supports him: Jim LaTorre, Howard Appleby, Jean-Francois Ducrest, and Ted Wendell of Northern Cross. Under the watch of these talented investors, the fund notched a tremendous gain in 2007, owing to some well-chosen names in the energy and metals industries. Its long-run returns have been even more impressive: Bill Rocco recently noted that its 15-year return is the best of any foreign large-value fund…
…Harbor International is one of those funds that we find ourselves recommending again and again. We’re compelled by this team’s experience level, respect for growing (and preserving) shareholder capital, and the discipline with which it continues to execute its sensible, bargain-hunting strategy. In addition to posting strong returns in the buoyant market environment of the past several years, its losses during the 2000-02 bear market were quite subdued, making it, like Contrafund, a remarkably smooth ride. Fabulous 10-year Morningstar Investor Returns are evidence that this fund’s many shareholders have profited handsomely from this team’s labors…
The article continued with these comments on Bill Gross, lead manager for PIMCO Total Return:
…Bill Gross took home our Fixed-Income Manager of the Year honors twice before–in 1998 and 2000. This is a well-deserved three-peat, in that his showing in 2007 exemplifies what he and the brain trust at PIMCO do best. Back in 2006, long before “subprime crisis” and “credit crunch” entered the national lexicon, Gross was discussing the potential for housing-market weakness to damp the economy. He began positioning his portfolios accordingly, reducing their exposure to corporate bonds and increasing their sensitivity to interest rates so that they would benefit from the lower interest rates he expected. That positioning proved off at first, leading to an uncharacteristically average showing in 2006 and the first part of 2007, but in hindsight it was amazingly prescient. As the housing market went from bad to worse and the Fed ratcheted down rates in the second half of this year, Gross’ charges reaped the rewards. In 2007, Harbor Bond and PIMCO Total Return smoked the typical offering in the intermediate-term bond category and topped the Lehman Brothers Aggregate Index by nearly 200 basis points–an astounding margin of victory in the bond world.
That sort of bold move is precisely what we’re talking about when we say that we look for managers who show courage in their convictions. And fortunately for Gross’ legions of shareholders, this is far from the first instance when he has risked short-term performance weakness with an eye toward improving long-term results. Both funds’ returns over the past decade are among the very best in their peer group, thanks to the PIMCO team’s keen evaluation of macroeconomic trends, considerable human resources, and derivatives capabilities. And owing to PIMCO’s gigantic footprint in the mutual fund world, many shareholders have enjoyed the fruits of Gross’ labors.’
Our congratulations go to all three winners. The accolades they have received are well deserved.
- Investing , Mutual Funds , Personal Finance
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