The envelope please . . . and the winner for best mutual fund managers in 2007 are Will Danoff of Fidelity, Hakan Castegren and the Northern Cross team at the Harbor International fund, and Bill Gross of PIMCO.
Chicago-based investment research firm Morningstar today named its top fund managers in the domestic-stock, international-stock and fixed-income categories based on their continued solid long- and short-term track records, combined with excellent fund stewardship.
Domestic-stock category winner Danoff has run Fidelity's Contrafund since 1990 and Advisor New Insights fund since its 2003 inception, accounting for roughly $90 billion between them. Both funds closed to new investors in 2006, but Advisor New Insights reopened to new accounts in November.
Contrafund's 10-year annualized return is 10.9% versus 6.2% for the S&P 500. Advisor New Insights' three-year annualized return is 16.9% versus 8.8 percent for the S&P 500, fueled by gains from Google, Berkshire Hathaway, and Apple
The Harbor International fund management team, led by Castegren, took top honors in the international-stock fund group. Castegren, who has managed the fund since it opened in 1987, and his four-member analyst team at Northern Cross follow a disciplined strategy of picking bargain blue chips with strong market shares or high barriers to entry, and they typically hold onto their stocks for years and maintain an annual turnover rate of less than 20%.
The Harbor International fund gained more than 20% last year, beating the vast majority of its foreign large-value counterparts. Castegren has more than $1 million of his own money invested in the fund. Morningstar named him the top international fund manager in 1996.
PIMCO founder and chief investment officer Bill Gross, Morningstar's first three-time winner, was honored for his success with the PIMCO Total Return (the world's largest bond fund) and the Harbor Bond funds.
By mid-2006, PIMCO and Gross anticipated the potential impact of falling home prices on corporate bonds and the overall economy, and they slashed their exposure to U.S. corporate bonds. They were a year early and that hurt results during the second half of 2006, but PIMCO and Gross' prescience enabled it to outperform most of its intermediate bond peers in 2007. The fund also avoided exposure to lower-rated subprime securities.
In 2007, both PIMCO Total Return and Harbor Bond topped the Lehman Brothers Aggregate Index by nearly 200 basis points.
The runners-up in 2007 were: David Williams, lead manager of Excelsior Value & Restructuring fund (domestic-stock fund category); James Moffett and his team of Michael Fogarty, Gary Anderson, and Michael Stack at UMB Scout International (international stock funds); and Dan Fuss and his team of Kathleen Gaffney, Matt Eagan, and Elaine Stokes at Loomis Sayles Bond
and Loomis Sayles Strategic Income funds (fixed income).