Little guys win big at Morningstar Manager of the Year awards

Boutique managers named best stock managers of 2012

Jan 3, 2013 @ 3:54 pm

By Jason Kephart

mutual funds, portfolio manager, morningstar
+ Zoom

Two boutique firms were the big winners of Morningstar Inc.'s stock fund Managers of the Year awards on Thursday.

Bill Frels and Mark Henneman, co-managers of the $2.6 billion Mairs & Power Growth Fund ticker:(MPGFX), took home the award for domestic stock fund managers of the year, beating larger nominees such as the $42 billion Fidelity Growth Company Fund ticker:(FDGRX) and the $7.8 billion American Funds New Economy Fund ticker:(ANEFX).

The Mairs & Power Growth Fund returned 21.9% in 2012 and ranked in the top 3% of large-cap blend funds.

The fund's strong performance is mostly the result of sticking to its guns. Only one of the fund's top 25 holdings, which make up the majority of assets, has been owned for less than 10 years, noted Morningstar analyst Greg Carlson in an article on why the fund was nominated. The managers also like to have a close connection with the management of the companies they buy; so much so that almost half the portfolio is made up of companies headquartered near its St. Paul, Minn., home office.

Rajiv Jain, manager of the $6.8 billion Virtus Emerging Markets Opportunities Fund ticker:(HEMZX) and the $1.3 billion Virtus Foreign Opportunities Fund ticker:(JVIAX), won the prize for best international manager of the year. The two funds returned 19.6% and 19.8%, respectively last year, putting them in the top quartile and top 10% of their respective categories.

Michael Herbst, director of active fund research at Morningstar, lauded Mr. Jain for his concentrated portfolios and straying far from the funds' benchmarks. He's had less than 15% of overlap with benchmarks recently, Mr. Herbst noted.

Other managers nominated in the international manager category were Mark Yockey, David Samra and Daniel O'Keefe of Artisan Funds and George Evans of OppenheimerFunds.

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