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We calculate a manager retention rate for fund com-
panies. The idea is to track how many managers a
firm has lost and how many it has retained. A new
manager doesn’t count against the number, only
departures. We look at the past five years and compute
a percentage based on the annual retention rate.
Good firms stay above
90%
consistently. A few
manage to hit
100%
. You won’t be surprised to know
those are mostly smaller firms. Even so, it’s a picture
of stability that’s quite appealing. I’ll highlight five
Morningstar Medalists from firms that haven’t lost
a single manager in the past five years. It’s a good
sign when a firm’s culture is strong enough that no
one wants to leave.
Hotchkis & Wiley High Yield
HWHAX
Hotchkis
&
Wiley has a total of
15
portfolio managers—
the most of any firm that has a
100%
retention rate.
This fund, which has a Morningstar Analyst Rating of
Bronze, is led by former
PIMCO
managers Mark
Hudoff and Ray Kennedy, who joined the firm in
2009
and
2008
, respectively. Perhaps enjoying the free-
dom of a smaller asset base than the one they ran at
PIMCO
, the managers have emphasized smaller
issuers and a more concentrated portfolio. They’ve
produced top-third five-year returns. They added
comanagers Patrick Meegan and Richard Mak in
2012
and
2013
, respectively.
Causeway International Value
CIVVX
Causeway has
11
portfolio managers. Some are quali-
tative and some are quantitative. This Gold-rated
fund is run by the qualitative side. Sarah Ketterer and
Harry Hartford are lead managers who co-founded
the firm in
2001
. They ply a contrarian strategy that is
limited to developed markets. They like to find
good companies priced cheaply because of a crisis.
Thus, they’ve added banks, drug companies, and
even
Volkswagen
VOW3
—all of which are facing
some big challenges.
Champlain Mid Cap
CIPMX
Champlain has
10
managers, and it’s been a model of
stability. Co-founder Scott Brayman’s former firm,
Sentinel, has seen much more turnover, so he would
seem to have learned some lessons when he set up
this firm in
2004
. This Silver-rated fund seeks out stable
growth companies trading at respectable prices.
Brayman and his team are much more disciplined on
valuation than most mid-growth managers, and
that can really pay off in years like this one, as the
fund’s year-to-date returns are in the top percentile.
More importantly, its long-term record is strong, too.
Metropolitan West Total Return Bond
MWTRX
This firm has eight managers, and it’s a good thing
they’ve stuck around, as this Gold-rated fund has
been a big magnet for investors leaving
PIMCO Total
Return
PTTRX
. No doubt the stability of manage-
ment is a welcome aspect of MetWest. The firm was
founded by ex-
PIMCO
managers, and it is run in a
way that would seem familiar with
PIMCO
Total Return.
However, it’s not an exact match. The fund does
very little with derivatives because management wants
to focus on bond selection. Tad Rivelle, Steve Kane,
and Laird Landmann have worked together for more
than two decades. They tend to invest where
prices are attractive, but they do take on more credit
risk than their peers, and their value-oriented
strategy doesn’t shield the fund from all credit risk.
Sound Shore
SSHFX
OK
, this is the only fund offered by Sound Shore, and
it has three managers, so its
100%
retention rate
is maybe a little less impressive than those above. But
talk about experience. Harry Burn and Gibbs Kane
founded the firm in
1978
, and John DeGulis has been
with the firm
20
years. The Silver-rated fund is a
mild-mannered focused fund that has consistently
performed well through all kinds of markets.
K
Firms With 100% Manager
Retention Rates
Tracking Morningstar Analyst Ratings
|
Russel Kinnel
What Are Morningstar
Analyst Ratings?
Our ratings are chosen for long-
term success. Analysts assess
a fund’s competitive advantages
by analyzing people, process,
parent, performance, and price.
They do rigorous analysis and
then submit their ratings to a
committee that vets their work
for thoroughness and consistency.