Lita's Mutual Fund Trends: Morningstar taps top '02 managers

» Kirk - Morningstar taps top '02 managers

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The manager for my largest holding made the fund manager of the year! I wonder if it means time to sell?

BTW, as explained elsewhere, the reason I bought a large amount of FLPSX back in 1998 when I left HP/Agilent was I had so much large cap tech that I wanted a good fund that was small cap and not tech... This fund looked like dead money for about a year then it really paid off well.

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Morningstar taps top '02 managers

http://www.marketwatch.com/news/print_st...
By Craig Tolliver, CBS.MarketWatch.com
Last Update: 12:22 PM ET Jan. 2, 2003


CHICAGO (CBS.MW) -- Where achieving lofty market gains once was the key criterion, Morningstar's three fund managers of 2002 earned kudos for adroit capital preservation.

This marks the 16th year that the noted fund-tracking firm has handed out its coveted fund-manager-of-the-year awards, recognizing managers in three categories: domestic stocks, international stocks and fixed income.

"2002 was one of the most challenging years for mutual-fund managers -- but one where rigorous analysis and disciplined investing paid off," noted Russ Kinnel, director of fund analysis for Morningstar.

The 2002 winners are:

Domestic stock fund manager of the year: Joel Tillinghast, Fidelity Low-Priced Stock (FLPSX: news, chart, profile).

International stock fund managers of the year: Rudolph-Riad Younes and Richard Pell, Julius Baer International Equity (BJBIX: news, chart, profile).

Fixed-income fund manager of the year: Management team, Dodge & Cox Income (DODIX: news, chart, profile).

"We want managers who put shareholders first and invest with conviction," Kinnell said. "The 2002 winners we selected have all these qualities. Not all of them made money during the bear market, but they were able to keep losses small, enabling shareholders to endure the difficult market conditions of the past few years."

Tillinghast of Fidelity Low-Priced Stock

As forecast Wednesday by CBS.MarketWatch.com, hands-on favorite Joel Tillinghast was indeed named Morningstar's domestic fund manager of the year. See Tillinghast interview.

In making the announcement, Don Phillips, managing director at Morningstar, noted the irony that after so many years of impressive gains, Tillinghast should win the award in his first-ever down year.

Fidelity Low Priced Stock finished 2002 down 6.2 percent -- still remarkable given the 16.2 percent drubbing visited on its small-cap-blend peers, according to Morningstar.

Tillinghast has kept the $15 billion fund performing ahead of the competition through good times and bad. Morningstar acknowledged that the award represents recognition of his career achievements as well as his performance over the past year.

"Steadiness has meant that Tillinghast has been a perennial runner-up for the award because he rarely posts monster returns," Kinnel said. "Yet, when we look back at the fund's long-term performance, he dwarfs the competition. It's time we recognize one of the best managers in the history of funds."
[Kirk Comment: It is about time people pay attention to overall return over long time periods! ]

Younes and Pell of Julius Baer International Equity

Rudolph-Riad Younes and Richard Pell follow a much bolder investing strategy than the other winners, but they still succeed at consistently beating their peers.

The pair has shown an uncanny knack for making smart market moves -- beating their peers both in years that favor the growth- and value-oriented investment styles, Morningstar said.

Julius Baer International Equity has led its category in every full calendar year since these managers took control in mid-1995. In 2002, it lost 3. 6 percent to place in the top 5 percent of Morningstar's foreign-stock-fund category.

"There have been plenty of fund managers who went from hero to goat or vice-versa since 1999," Kinnel said. "When we look at this fund's record, Younes and Pell posted top-quartile returns in 1997, 1998 and 1999. Then, they put up three more years of outstanding returns even as leadership in the market swung from large growth to small value."

Management team of Dodge & Cox Income

The Dodge & Cox Income Fund managers are James Dignan, Thomas Dugan, Dana Emery, John Gunn, Jeffrey Klein, Peter Lambert, Charles Pohl, Kent Radspinner, Larissa Roesch, A. Horton Shapiro and Robert Thompson.

The team's rolling 12-month returns outperformed those of its peers in every single period during a 10-year stretch -- a feat no other fund could match, according to Morningstar. The fund sports a 10-year annualized return of 8 percent and delivered a gain of 10.7 percent in 2002.

"The secret is that management focuses on which bonds to add to the portfolio rather than making big interest-rate or credit bets," Kinnel said.

The fund's management team also drew applause for the bonds it didn't own, managing to steer clear of debt-market fiascos like that surrounding Enron.

Craig Tolliver is the mutual funds editor for CBS.MarketWatch.com in Los Angeles.

-- posted by Kirk