If you want to get under a fund manager’s skin, do
what I’m about to do: Compare his record to that
of his former colleague. Just about anything else you
can say will rankle less.
I don’t enjoy the angry phone calls, but it’s a valuable
exercise. A fund has many moving parts, including
strategy, manager, and analysts. Take the manager
out but leave the other two in place with a new
manager, and you have a great petri dish for testing
all three.
I’ve collected six examples of funds where a manager
or analysts left to do something quite similar to
a previous charge. The return figures in the tables
are annualized. Let’s take them chronologically.
Oakmark International
OAKIX
vs.
Artisan International Value
ARTIX
In
2002
, analysts David Samra and Dan O’Keefe left
Harris Associates (manager of Oakmark funds) to
run a new fund for Artisan. The new fund launched in
September
2002
and largely applied that same
brand of focused risk-aware value that we’ve long
associated with David Herro. One difference be-
tween the two funds is that Samra and O’Keefe
bought a little more small- and mid-cap fare than
Herro did. Even today, the fund has a smaller market
cap than Oakmark does. In addition, Samra and
O’Keefe place a greater emphasis on stability over
cheapness and so have more names in the blend
part of the Morningstar Style Box.
Both funds have been risk-averse, particularly debt-
averse, and that’s been a great recipe for success.
In fact, the funds have been real standouts. Interest-
ingly, they have only
11%
overlap between the portfo-
lios, so they’ve taken different routes to great results.
Winner:
Artisan International Value returned an
annualized
15
.
92%
compared with
13
.
11%
for
Oakmark. Those are two of the best returns over that
time period, so shareholders of either fund win.
This validates Harris’ strategy and its culture, but it
also speaks well about Artisan, which has a tre-
mendous record of bringing in new teams. Artisan
offers managers quite a lot of autonomy as well
as profit-sharing from their piece of the business,
and it has succeeded in drawing topnotch talent.
Its new funds are certainly better bets than most.
Sentinel Small Company
SAGWX
vs.
Champlain Small Company
CIPSX
Scott Brayman left Sentinel in
2004
to start his own
fund company. Brayman vowed to close his funds
quicker than Sentinel, which he thought was too cava-
lier on that count. Brayman brought some colleagues
with him, and they continued to ply a strategy empha-
sizing steady growth and modest levels of debt. As
Fund vs. Fund Showdown
Fund Reports
4
Fidelity Low-Priced Stock
Fidelity Growth Company
Fidelity High Income
Fidelity Total Bond
Morningstar Research
8
Raising the Bar on
Equity-Income Strategies
The Contrarian
10
Betting on a Rebound in
Resource Stocks
Red Flags
11
Watch Out for the Tax Bill on
These Funds
Market Overview
12
Leaders & Laggards
13
Manager Changes and News
14
Portfolio Matters
16
Avoid These Portfolio Goofs
Tracking Morningstar
18
Analyst Ratings
Income Strategist
20
Tread Carefully With Non-
Traditional-Bond Funds
FundInvestor 500
22
FundInvestor 500 Spotlight
23
Follow Russ on Twitter
@RussKinnel
RusselKinnel,
Director of FundResearch and Editor
FundInvestor
July 2014
Vol. 22 No. 11
Research and recommendatio s for the s riou fund investo
SM
Continued on Page 2
Fund
Morningstar
Analyst
Rating
Prospectus
Net Expense
Ratio %
Inception
Date
Return %
10/01/02
to
05/31/14
Artisan Int’l Value ARTKX
Œ
1.18 9/23/02
15.92
Oakmark Int’l OAKIX
Œ
0.98 9/30/92 13.11
