Today, Morningstar revealed the nominees for the Morningstar Awards for Investing Excellence--Outstanding Portfolio Manager. Morningstar analysts nominated five candidates for the award across equity, fixed-income, and multi-asset categories. The winner will be announced during the Morningstar Investment Conference in May 2019.
In addition to delivering exceptional long-term investment results, these five nominees have demonstrated clear investment skill, alignment of interests with investors, and the courage to differ from the consensus. To qualify for a nomination, the nominee must run an investment strategy that earns a Morningstar Analyst Rating of Silver or Gold. Over the course of the nominees’ tenures, these individuals have navigated through various market cycles and have remained among the best in their respective asset classes. Lastly, the nominees have all invested meaningfully alongside investors in their respective strategies.
Below we highlight each nominee in more detail.
T. Rowe Price
Manager Tenure: 27 years
Brian Berghuis is one of the industry's best and longest-tenured managers. He's employed a consistent risk-conscious approach since T. Rowe Price Mid-Cap Growth's (RPMGX) 1992 inception, capably guiding it even in the wake of significant asset growth, and has achieved topnotch results for its investors.
Berghuis benefits from excellent analytical resources at the firm, but he's been the steady driver behind the fund's success for 27 years. His level-headedness and patience have helped avoid major performance pitfalls, with the fund losing just 78% as much as the Russell Mid Cap Growth Index in downturns on his watch. The fund has been among the most consistent around. It has beaten the benchmark in 82% of the rolling three-year periods under Berghuis and has never landed in the category's bottom quartile through that lens.
Berghuis has stuck to a consistent approach that focuses on companies with good business models, differentiated products, capable management teams, and growing returns on invested capital. He builds the portfolio with a risk-conscious mindset and a tilt toward quality. For instance, Berghuis' cautious approach helped the fund avoid blowing up when the tech bubble burst in the early 2000s, and it also held up relatively well during the 2007-09 financial crisis. Meanwhile, the fund regularly owns plenty of nonbenchmark positions, which has helped distinguish it from cheaper passive options over his tenure.
T. Rowe Price Target-Date Retirement Series
Manager Tenure: 17 years
Jerome Clark is a pioneer in the target-date space, as he started one of the industry’s first series of target-date funds in 2002 at T. Rowe Price.
Although a few firms started a target-date series before T. Rowe Price, most have overhauled their approach or team since then. Clark and T. Rowe Price are an exception. The approach has remained consistent, and Clark is the longest-tenured target-date manager in the industry. The firm’s target-date offering has delivered solid long-term results and has resonated with investors, with more than $220 billion across mutual fund, CIT, and separate account vehicles.
The T. Rowe Price Retirement series--the firm’s legacy offering--has stood out from the crowd since the start with a more aggressive equity glide path than most peers. The team believes the biggest risk retirees face is a savings shortfall, and a high equity weighting helps combat that risk. The series’ positioning has remained consistent, and many peers have since increased their equity exposure across the glide path in recent years. The team hasn’t stood still, either, as it regularly revisits the series’ asset allocation. In fact, in late 2017, it made forward-looking changes within the series’ bond sleeve, which the team expects will improve long-term risk-adjusted returns while decreasing sensitivity to potential rising interest rates.
Manager Tenure: 28 years
Dan Fuss pioneered the benchmark-agnostic, multisector approach to fixed-income that has defined the firm’s flagship Loomis Sayles Bond (LSBRX) since 1991. During his tenure at Loomis Sayles, he’s demonstrated a value-driven, often contrarian, and aggressive strategy that’s contributed to an impressive long-term record for the fund and its siblings.
That said, Fuss has not just chased yield or indiscriminately purchased cheap bonds during periods of market turmoil. At the core of his approach are deep research and careful analysis. Once an investment meets his criteria, he’s been willing to go against the crowd and to buy and hold through bouts of market turbulence. For example, he bought convertibles and zero-coupon bonds in 1994’s bond-market rout and added battered Latin American sovereign bonds in the mid-1990s following the Mexico peso crisis. In more recent years, wins for the fund have come from shrewdly moving into Irish sovereign debt at the height of that country’s troubles, adding troubled European bank debt in 2011 against the backdrop of the eurozone crisis, and expanding the fund’s allocation to junk-bond names (including energy issues) during 2014's and 2015’s commodity-driven troubles. There’s no denying the substantial risks in Loomis Sayles Bond--which has at times included single-digit allocations to dividend-paying common stock--but investors who have stuck with Fuss through the inevitable ups and downs have been well-rewarded with topnotch long-term returns.
Fuss also deserves credit for working with firm CIO Jae Park to codify the firm’s fixed-income investment process and to develop the next generation of bond investors at Loomis Sayles. Today, he works closely with comanagers Elaine Stokes, Matt Eagan, and Brian Kennedy, who have gradually taken increasing responsibility for the day-to-day management of the funds; Stokes and Eagan have been named managers on Loomis Sayles Bond since 2007.
Mary Ellen Stanek
Baird Asset Management
Manager Tenure: 20 years
Stewardship is the centerpiece of Mary Ellen Stanek’s approach to investment management. Over her 35-year career (including two decades at Baird), Stanek has been a staunch advocate for low fees, circumspect capacity management, and incentives to encourage analysts' career development.
Stanek and her team’s disciplined process of security selection and sector rotation might look staid in comparison to more-complex strategies plied by some rivals, but it shines in part because of these efforts. This team invests only in areas where it believes it can construct thorough investment ideas, which has led it to avoid some thornier sectors of the bond market used by some competitors. Low fees, however, disincentivize outsize risk-taking and facilitate nuanced research within the team’s core areas of expertise: corporate credit, asset-backed securities, and mortgage-backed securities. Meanwhile, Stanek’s commitment to employee development and Baird’s employee-ownership structure foster a tight-knit team culture with little turnover. These attributes have enriched the team’s investment process over time and facilitated the funds’ strong long-term performance.
Stanek’s willingness to stick to her knitting, foster a team culture, and add depth to team’s core areas of competence is uncommon and commendable.
Manager Tenure: 30 years
Joel Tillinghast is a legendary manager who has posted tremendous long-term results despite the strategy’s huge asset base, though he hasn’t changed his stripes since starting Fidelity Low-Priced Stock (FLPSX) in late 1989.
Tillinghast’s low-turnover, value-oriented approach searches for compelling stocks around the world trading below $35 per share, a construct initially designed to focus on small caps. But the fund is a unique collection of more than 800 names drawn from across the globe and market-cap spectrum. An eclectic portfolio reinforces the strategy’s place as a standout. Despite the challenges posed by this strategy’s size, Tillinghast consistently proves his skill as a hunter of high-quality businesses.
As a group, they have reliably preserved capital: Since the housing bubble burst in October 2007, the fund has stayed ahead of its benchmark/peers in all but one of the market’s corrections (that is, periods when the index lost 10% or more). Long-term shareholders have not been disappointed. The fund has gained 13.3% annualized from Tillinghast's 1989 start through March 2019, one of the most impressive showings of any small- or mid-cap-focused fund. And while Tillinghast has the support of Fidelity’s small-cap team and broader firm resources, his knowledge and insights of the sprawling portfolio are what have long set him apart from the rest.
Alfonzo Bruno, CFA does not own shares in any of the securities mentioned above. Find out about Morningstar's editorial policies.