“We still like them, and they have become safer and more predictable,” Ivascyn says. Ivascyn also bet on Australian government bonds, which rose as the Australian economy weakened because of a slump in commodities prices. Pimco Income’s managers say their ability to regularly adjust the mix of assets -- rather than blindly mimic an index -- is critical to their performance, especially in an environment of ultralow interest rates.

Thornburg Investment was a double winner in the Bloomberg Markets ranking. Its $1.3 billion Strategic Income Fund topped the global bonds category, with average returns of 7.1 percent over three years and 7.8 percent over five.

Co-manager Jason Brady says his ability to buy income- producing securities anywhere in the world is crucial to the fund’s success. The fund topped its category despite a 3.2 percent return in 2014, due in part to the fact that it missed out on much of the rally in government bonds.

“The risk/reward didn’t look that good to us,” Brady says. “Too many of the buyers, like the Federal Reserve, don’t care if they make money.”

Brady has concentrated on corporate debt, including high yield. Because most of his bonds are denominated in dollars, the fund wasn’t hurt in 2014 as the dollar strengthened against most currencies. One of Brady’s holdings, Odebrecht Offshore Drilling Finance, a Brazilian supplier of ships that explore for oil, yields about 13 percent, a reflection of investor concern about plummeting oil prices.

“There is a lot of risk, but we also have a lot of protection,” Brady says.

Albert Nicholas, known to friends as Ab, almost chose another field that offered the kind of competitive challenge he thrives on. A star basketball player at the University of Wisconsin, he was offered $6,000 a year in 1954 to play for the Milwaukee Hawks in the National Basketball Association. He took a financial job instead for $4,200.

“I think I made the right decision,” he says.

Nicholas opened his own Milwaukee-based investment firm in 1967 and two years later started the Nicholas Fund. His 45 years running one fund make him the third-longest-serving mutual fund manager in the U.S., after Ernest Monrad, 84, of Northeast Investors Trust, and Rupert Johnson Jr., 74, of the Franklin DynaTech Fund.

Nicholas’s firm runs six mutual funds and a total of $5 billion in assets. His son David, 53, is co-manager of the Nicholas Fund and lead manager of the $715 million Nicholas II fund, which buys midcap stocks, and the $323 million Nicholas Limited Edition fund, which invests in small caps.

After a strong start in the 1960s, the Nicholas Fund lost 53 percent in the recession of 1973 and 33 percent in 1974. Nicholas changed his strategy. He abandoned the chase for hot stocks and looked for companies he could hang on to -- steady growers with strong balance sheets and limited exposure to the ups and downs of the economy. The idea was to make money by avoiding steep plunges.

“We have two principles,” he says, adapting an old joke. “The first is: Don’t lose money. The second is: Don’t forget principle No. 1.”

Nicholas’s focus on avoiding losses helped him in 2008, when he beat 93 percent of peers, and in 2011, when he beat 96 percent as the S&P 500 gained 2.1 percent. He largely avoids banks, cyclical businesses, and commodities producers, including energy companies.

“I don’t know anyone last year who said oil was going to fall 50 percent,” he says. “So much for predicting.”

O’Reilly Automotive is a longtime Nicholas favorite. The Springfield, Missouri–based retailer grows steadily in good economic times and bad.

“When the economy struggles, people keep their cars longer,” he says.

Nicholas first put the stock in his fund in the third quarter of 2002, when it sold for an average of just over $14 a share. On Feb. 17, the price was $206. He is hanging on to the stock, though it looks expensive on paper.

“We are patient with great companies, even if they are a little overvalued,” he says.

AMG has also been in the portfolio since 2002 and had appreciated roughly fivefold since then as of Dec. 31. The Beverly, Massachusetts, firm buys up small money managers and gives their executives an incentive to continue to perform well. AMG owns a stake in Yacktman Asset Management, whose AMG Yacktman Fund boasts an average return of 12.4 percent over the five years ended on March 16.

Nicholas has known bad times. His experience with losing money in the 1970s, and again in 2001 and 2002, when he bought plunging tech stocks too soon, has shown him it doesn’t take much to fall behind. Yet he is not about to sit down with a textbook by Eugene Fama.

“We think if we stick to our philosophy and protect people on the downside, we can produce a pretty good record,” he says. “The past 40 years has proved that.”

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