Morningstar Advisor - June/July 2012 - (Page 56)

Undiscovered Managers Where Shareholders Ride First Class By Greg Carlson At Berwyn Funds, Bob Killen is willing to make the tough decisions for his investors. Bob Killen is a manager who doesn’t flinch when it comes to doing right by shareholders. In late 2010, for example, in the midst of a mad scramble by investors searching for income, Killen and his investment team closed Berwyn Income BERIX to new investors, a fund that accounts for 70% of Berwyn Funds’ $2 billion in total assets. Inflows were accelerating too fast, and the managers weren’t finding many new opportunities, causing the fund’s cash holdings to spike. After working down that stake during 2011’s third-quarter downturn, Killen reopened the fund. “We’re not asset-gatherers,” Killen says. “We’re responsible to our shareholders first. We want to be good stewards.” The decision to close a fund, albeit one that provided the firm a steady flow of new assets, paled in comparison with a situation Killen had to confront in 2009. His brother, Ed, a founding partner, left the firm by mutual agreement. (He moved over to an affiliated broker/dealer in which both Killen brothers own stakes.) “We all felt he wasn’t making the contributions he used to make, and that included Ed,” Bob Killen says. “The overall approach we used to use, including using Value Line, was something he clung to. It led to strains. Our strategy didn’t change, but the methodology changed.” Killen’s commitment to putting the interests of shareholders over his own has paid off. Over the trailing decade through April 2012, Berwyn Income and Berwyn Fund BERWX have beaten more than 85% of their respective conservative-allocation and small-value peers. Both earn a Morningstar Analyst Rating of Silver under the new analyst-driven ratings 56 Morningstar Advisor June/July 2012

Table of Contents for the Digital Edition of Morningstar Advisor - June/July 2012

Morningstar Advisor - June/July 2012
Contributors
Letter From the Editor
Be Worth Remarking About
How Important Is Stewardship?
From West Point to Points East
Where a Fund’s Secrets Lie
Getting Fund Directors on Board
Managers Prep for Housing Rebound
Four Picks for the Present
Investment Briefs
A Hedge Against Career Risk
Natural Gas Reaches Capitulation
Family Matters
How Good Stewardship Predicts Superior Performance
Stewardship Goes Back to the Fundamentals
On the Go for Fixed Income
Where Shareholders Ride First Class
Dangers Lurk in Exchange-Traded Notes
Stocks on Sale in a Strong Market
A Good Steward Is Easy to Find
Our Favorite Mutual Funds
50 Most Popular ETFs
Undervalued Stocks With Wide Moats
Buffett Rule’s Biggest Losers

Morningstar Advisor - June/July 2012

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