69 / 708
18
The best time period by which to judge a fund is over
the entire manager’s entire tenure. Whether that’s
29
months or
29
years, you want as much data
as possible. Obviously, the longer the better, in order
to assess manager skill over a variety of markets.
However, we can’t provide
500
different time periods
in the
FundInvestor
data tables, so we present
the standard trailing time periods. As it happens, some
of our Morningstar Medalists recently crossed the
10
-year threshold for manager tenure. That tells you
that they own the Morningstar Rating, or star
rating, as well as all the total returns displayed. Thus,
it seems like a good time to look at five funds
where the
10
-year record really is the best to go with.
Diamond Hill Small-Mid Cap
DHMAX
Chris Welch took the reins here at the end of December
2005
and he’s had a very nice run. Welch applies a
patient value approach that is very much informed by
Graham and Dodd. He estimates a firm’s intrinsic
value and seeks to buy at a sizable discount. He also
keeps a fairly compact portfolio of between
55
and
70
names. He’s produced a
7%
annualized return over
the past
10
years, and that’s good for the top
11%
of the mid-cap value Morningstar Category. The fund
has been a very consistent performer, but that
means Welch now has the challenge of running quite
a bit more money than before. The fund now tops
out at
$1
.
3
billion, whereas it was only
$100
million
five years ago. The fund closed to new investors in
January
2016
, so that should slow the pace of inflows.
American Funds American Mutual
AMRMX
While no single manager at American Funds can be
said to own his or her fund’s entire record, three
of the fund’s six managers started on this fund (with
a Morningstar Analyst Rating of Gold) in January
2006
and one more joined in
2007
. The three who
began in
2006
are Joyce Gordon, James Lovelace,
and James Terrille. During their tenure the fund has
returned
6
.
3%
annualized, to land in the top
16%
of
large-value category funds. They’re skilled stock-
pickers who focus on competitively advantaged and
attractively valued dividend-payers. Add in a low
expense ratio and you get strong results.
Mairs & Power Growth
MPGFX
Mark Henneman has helped produce a solid
7
.
1%
return since he started on this fund in January
2006
.
He can’t be said to own the whole record, as
William Frels was lead manager until July
2013
and
stayed on as comanager until the end of
2014
,
but Henneman has been an integral part of the process.
The strategy is to invest very patiently in a focused
portfolio of stable firms with competitive advan-
tages. Results have been quite consistent: Over the
past
10
years, the fund has produced three-year
returns that land in the top quartile of its peer group
for
69%
of the time.
Berwyn Income
BERIX
George Cipolloni
III
has produced outstanding
10
-year
returns that land in the top
1%
of conservative-
allocation category funds. This Silver-rated fund takes
a contrarian value approach. Cipolloni and his
comanagers buy dividend-paying stocks, corporate
bonds (mainly high-yield), preferreds, and con-
vertibles. Management tends to actively move around
the bond market to scoop up the best values.
BBH Core Select
BBTEX
Timothy Hartch took the helm at this Silver-rated
fund in October
2005
and the fund’s
10
-year return
is an impressive
8
.
2%
annualized, which is well
ahead of the S
&
P
500
’s
6
.
5%
return. Hartch runs a
very disciplined approach that requires stocks
trading at
25%
or greater discounts and then an auto-
matic sell once that discount drops below
10%
.
He wants companies with sustainable competitive ad-
vantages and strong balance sheets. It’s not easy
to find such companies trading at big discounts, which
may be one reason he runs a concentrated portfolio.
The fund lagged its peers in recent years but lost
much less in January
2016
thanks to steady names
like Comcast
CMCSA
and Berkshire Hathaway
BRK
.A.
The fund is closed to new investors, but outflows
may prompt it to reopen.
K
Medalists Where the 10-Year Record
Tells the Story
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.