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Primecap Leads Manager of the Year Winners
While the Morningstar Fund Manager of the Year
award winners have distinguished themselves in the
past calendar year, we’ve never simply chosen
the highest-returning funds. The awards recognize
managers who have not only just completed
outstanding years but have also tacked on a winning
year to their already stellar long-term track records.
Our winners have generated strong long-term
risk-adjusted returns and have been strong stewards
of their investors’ capital. Beyond having had a great
year and possessing an excellent long-term record,
our winners must have current Morningstar Analyst
Ratings of Gold, Silver, or Bronze, indicating that
our analysts have conviction in the managers’ ability
to outperform their categories and/or benchmarks on
a risk-adjusted basis over the long haul.
Domestic-Stock Fund Manager of the Year
Theo Kolokotrones, Joel Fried, Al Mordecai, Mohsin
Ansari, and James Marchetti of
Primecap
Odyssey Aggressive Growth
POAGX
and
Vanguard Primecap
VPMCX
The team from Primecap has subadvised Vanguard
Primecap for the past
30
years and Vanguard Capital
Opportunity for the past
20
, and it has been advising
three direct-sold Primecap funds for the past decade.
The funds are all variants of the same patient con-
trarian growth strategy, which is based on finding
stocks with great long-term growth prospects at
discount prices and being willing to hang on to them
until the market recognizes their worth. This
publicity-shy team quietly goes about its business,
with each manager handling his own sleeve of the
portfolio and some senior analysts also getting
smaller sleeves to run. Because they all hew to the
same investment philosophy, the overall portfolio
often has significant sector or industry overweight-
ings, but those result from independent decisions
made by different managers rather than a single deci-
sion to place a big bet in one area of the market.
Fund Manager Changes
Fund News
American Century Small Cap Value ASVIX
Impact: Negative Date: 11-01-14
Lead manager Ben Giele has left the fund in the hands of comanagers Jeff John and Miles Lewis.
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Our Take:
Giele had a strong track record, and John and Lewis have brief track records. In fact, Lewis has none while
John has been a comanager only since 2012. We lowered our Morningstar Analyst Rating to Neutral as a result.
First Eagle Global SGENX, First Eagle Overseas SGOVX
Impact: Negative Date: 10-09-14
Comanager Abhay Deshpande has departed. Matthew McLennan and Kimball Brooker Jr. remain as managers.
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Our Take: The funds remain in good hands, but they look a little shorthanded with more than $60 billion to
manage. First Eagle let these funds get quite large before closing Overseas, and that’s quite a lot for the two
managers to handle. We lowered the funds’ ratings to Bronze from Silver.
Janus Global Research JAWWX
Impact: Neutral
Date: 12-01-14
Jim Goff stepped down as head of research and nominal manager of this fund. Carmel Wellso succeeds him.
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Our Take: This is a research fund that delegates stock selection to the analysts. In this case, the named
manager doesn’t have the same impact as at a typical actively managed fund.
Royce Low Priced Stock RYLPX and Royce Premier RYPRX
Impact: Neutral
Date: 11-10-14
Whitney George has left Royce after being mired in a severe slump. At Royce Low Priced Stock, Jim Stoeffel
is now the lead manager. He had been an assistant manager since 2013 and worked for Royce since 2009. At
Royce Premier, Chuck Royce shifts from comanager to sole lead manager.
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Our Take: Stoeffel produced
decent results during a previous stint at CRM Small Cap Value CRISX, so there are some positives here, but he
doesn’t have George’s track record. The firm says that Royce Low Priced Stock will return to its roots with
lower-priced stocks and will shed the materials stocks that have killed performance. We lowered that fund to
Neutral. Premier’s change is less dramatic. George’s half of the portfolio will go to Royce, who was already
running the other half. We rate Royce Premier Silver.
T. Rowe Price International Stock PRITX
Impact: Negative Date: 04-01-15
Bob Smith is set to step down this year; Richard Clattenburg will take his place. Clattenburg has been with
T. Rowe Price since 2005, serving as an analyst and associate portfolio manager.
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Our Take: Clattenburg lacks
a record, so it’s a big drop from the seasoned Smith. We’ve lowered our rating to Neutral.
Vanguard Convertible Securities VCVSX
Impact: Negative Date: 06-01-15
Veteran manager Larry Keele is stepping down and being replaced by Stuart Spangler.
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Our Take: Oaktree is
an excellent firm so we remain confident in the fund, but it’s still a blow to lose Keele, who has built a great
record here. We will post a new rating shortly.
Vanguard Intermediate-Term Treasury VFITX,
Impact: Neutral
Date: 01-02-15
Vanguard Long-Term Treasury VUSTX,
Vanguard Short-Term Treasury VFISX
Gemma Wright-Casparius has replaced David Glocke as manager of the three funds. Wright-Casparius is
head of Vanguard’s TIPS and Treasuries group and manager of Vanguard Inflation-Protected Securities VIPSX
fund.
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Our Take: The fund remains in good hands. We have affirmed our Silver rating on the funds.
Vanguard Short-Term Federal VSGBX
Impact: Neutral
Date: 01-02-15
Brian Quigley has replaced Ron Reardon as portfolio manager of this fund. Quigley has worked on the fund
since 2007.
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Our Take: Quigley is experienced, and the fund doesn’t have much flexibility to begin with, so we
don’t expect any big changes. We are maintaining our Silver rating.