Morningstar Advisor - February/March 2012 - (Page 24)
2011 Fund Manager Award Winners Announced
On Jan. 4, Morningstar presented its annual Fund Manager of the Year awards. The 2011 winners are:
Domestic-Stock Fund Manager of the Year for 2011
Scott Satterwhite, James Kieffer, and George Sertl r Artisan Mid Cap Value ARTQX: 2011 Return/Category Rank: 6.42%/2 r Artisan Value ARTLX: 2011 Return/ Category Rank: 5.49%/15 r Artisan Small Cap Value ARTVX: 2011 Return/Category Rank: negative 3.17%/49 Scott Satterwhite, James Kieffer, and George Sertl shone in 2011 but didn’t get off to a running start. Although each of the three funds they manage gained more than 10% in 2010 and continued on an upward trek in early 2011, the market favored companies that were more highly leveraged than what this team prefers and the funds lagged their peers moving into the year. Yet, when the tide turned and risky fare was punished, this team’s approach proved resilient. The managers achieved their success in 2011 and have amassed an impressive longer-term record by applying a patient, contrarian approach to companies of all sizes.
International-Stock Fund Manager of the Year for 2011
The fund’s biggest help came from heavy positions in tobacco and alcohol stocks, which had a standout year. The portfolio held sizable positions in Philip Morris PM and British American Tobacco BATS plus spirits-maker Diageo DGE, all of which were up double digits in 2011. But the real key to the fund’s resilience in 2011 was the portfolio’s distance from banks, the epicenter of Europe’s problems. The fund has one of the smallest bank weightings in its category, with a few non-European banks holding measured spots in its portfolio.
Fixed-Income Fund Manager of the Year for 2011
nominees for the award were Jeffrey Bezos of Amazon.com AMZN and John Pinkerton of Range Resources RRC. “This year’s nominees each have added intrinsic value to the companies they run,” said Paul Larson, chief equities strategist and editor of Morningstar StockInvestor. “James Sinegal, who has served as CEO since co-founding Costco in 1983, has created and maintained value for all company stakeholders during his tenure. The average Costco employee is attractively compensated relative to other retail workers, keeping employee turnover low and productivity high. Although its topnotch benefits package and superior wages are costly on the surface, the firm is reimbursed handsomely, generating more than $500,000 in sales per employee. “At the same time, the company remains a low-cost producer for its customers. Costco also has reasonable management compensation levels and a high level of communication and transparency with investors. The company has grown considerably over the past few decades, and we think it’s well positioned to continue expanding internationally.” While the total annualized return of the S&P 500 has been nearly flat over the past five years, Costco shareholders have seen a return of nearly 12% annualized over the same period. Notably, in fiscal 2011, Sinegal helped Costco achieve comparable-club sales of 10%, 10 basis points of operating margin expansion to 2.8%, a 14.2% return on invested capital, and more than $1 billion returned to shareholders in repurchases and dividends.
John Carlson r Fidelity New Markets Income FNMIX: 2011 Return/Category Rank: 7.93%/1 This fund focuses on buying emerging-markets bonds denominated in U.S. dollars, and 2011 was a good year for that mandate. But its stellar results owe much to manager John Carlson’s experience and deft management in what was a rocky environment for emerging markets. Plenty of managers paid for being on the wrong side of interest rates in 2011, but Carlson got it right. He doesn’t typically make big interest-rate bets, but he was concerned about deflation and lengthened the fund’s duration, a measure of its interest-rate risk, in response. The fund’s duration peaked near 7.5 years in October, well above the index’s level of 6.75 years, just in time to benefit from the rally for long-dated, dollar-denominated debt. He has since brought the fund’s duration closer to that of its index.
William Browne, John Spears, Tom Shrager, and Bob Wyckoff r Tweedy, Browne Global Value TBGVX: 2011 Return/Category Rank: negative 4.13%/5 This fund and its management team stood out for limiting losses in a brutal year for international-stock investing. Tweedy, Browne Global Value lost 4.13% in 2011, which was roughly 800 basis points better than rival funds and the MSCI EAFE Index.
Costco Boss Wins CEO of the Year
James Sinegal, CEO of Costco Wholesale Corp. COST, was named Morningstar’s 2011 CEO of the Year on Jan. 4. The other
2011 Fund Flows Show Drop for U.S.-Equity Funds
Morningstar’s final fund flow data for 2011 came out on Jan. 11, and overall, U.S.equity funds shed $93 billion for the year.
24 Morningstar Advisor February/March 2012
Table of Contents for the Digital Edition of Morningstar Advisor - February/March 2012
Morningstar Advisor - February/March 2012
Letter From the Editor
Make a Difference Stories, Not Debates
How Concerned Are You About Europe?
Analytical and Independent
What to Ask When a Fund Manager Leaves
Past, Present, Future
Have Financials Gotten Cheap Enough?
Four Picks for the Present
Tactical Funds Miss Their Chance
Specialty Retail: Ad Hoc Opportunity
How Europe Is Making Its Crisis Worse
Impact on U.S. Economy Will Be Minimal
European Banks: Bargains or Value Traps?
Don’t Count the Euro Out Yet
Europe on the Brink
GoodHaven Realizes Its Vision
How Index Trading Increases Market Vulnerability
Nonlisted REITS: Handle With Care
Safety Picks for the Many Moods of Mr. Market
On the Prowl for Large- Blend Index-Beaters
Our Favorite Mutual Funds
50 Most Popular ETFs
Undervalued Stocks With Wide Moats
The Math That Matters
Morningstar Advisor - February/March 2012