Morningstar has announced five nominees for top domestic stock fund manager of the year, which will be announced the first week of January. Other category nominees will be announced in the next few days.
The 2012 nominees for domestic stock fund manager are: the team from American Funds New Economy (ANEFX); Timothy Hartch and Michael Keller of BBH Core Select (BBTEX); Steve Wymer of Fidelity Growth Company (FDGRX); Bill Frels, Mark Henneman and team from Mairs & Power Growth (MPGFX); and Bill Nygren of Oakmark (OAKMX) and Oakmark Select (OAKLX)
The team from American Funds had a year-to-date return through Dec. 10 of 21.3 percent. The strong manager lineup of Timothy Armour, Gordon Crawford, Mark Denning, Claudia Huntington and Harold La have run separate pieces of the fund for an average of 14 years. A late 2009 prospectus change gave the managers flexibility that contributed to a very impressive 2012, says Morningstar. The company can now invest in any fund that benefits from or creates innovation. The broader mandate has allowed the managers to trim an outsized tech weighting and give them room to build larger stakes in health care and consumer cyclical firms. The fund also had lighter than usual weightings in energy and materials. With a third of its assets overseas, the fund found winners across the globe, says Morningstar.
Timothy Hartch and Michael Keller of BBH Core Select won a nomination with a year-to-date return through Dec. 10 of 18.9 percent. Morningstar calls the management distinctive and says Hartch and Keller run a concentrated portfolio of roughly 30 stocks, ignoring the sector and individual stock weightings of the fund’s S&P benchmark and focusing heavily on downside protection. They have managed to roughly double returns of the S&P 500 and the typical large-blend fund.
Third on the list of nominees is Steve Wymer of Fidelity Growth Company, who Morningstar calls a rarity—an aggressive growth manager who has survived and thrived through multiple bubbles and bear markets. Year-to-date returns through Dec. 10 are 17.7 percent. Wymer has lasted by exhibiting patience and conviction and owes his success this year to long-term holdings such as Apple.
Also nominated are Bill Frels and Mark Henneman and the team from Mairs & Power Growth with year-to-date returns through Dec. 10 of 20.7 percent. Of the fund’s top 25 holdings, 18 were bought in the 1990s and only one has not been held for at least 10 years. Although they stick close to their St. Paul, Minn., base, the home-state bias has helped the managers focus intently on a handful of higher quality global firms whose fortunes are not necessarily tied to the one state.
Rounding out the top five is Bill Nygren of Oakmark and Oakmark Select with year-to-date returns through Dec. 10 of 19.1 percent and 19.2 percent, respectively. He is described as an accomplished value investor. He has demonstrated he has a broader definition of value than most of his peers, Morningstar says. Both of his charges have healthy weightings in the growth side of the Morningstar style box and a bigger stake in tech firms than their typical large-blend peer.