Summit Mutual Funds’ Gary Rodmaker, in tuxedo and bow tie, was quite a sight rounding Manhattan’s Columbus Circle in a bicycle taxi on his way to accept a trophy at last month’s Lipper Fund Awards 2007.
BOSTON — Summit Mutual Funds’ Gary Rodmaker, in tuxedo and bow tie, was quite a sight rounding Manhattan’s Columbus Circle in a bicycle taxi on his way to accept a trophy at last month’s Lipper Fund Awards 2007.
If Summit, winner for best small bond group, is honored again next year, maybe the portfolio manager’s bosses will spring for a limo, as such awards — whether from Lipper Inc., Morningstar Inc. or Standard & Poor’s — are potential marketing gold.
“We’re hoping to get a lot of mileage out of it,” said Dave Mazza, national marketing director at Summit Investment Partners Inc., a Cincinnati-based company with $1.2 billion in mutual fund assets. “We are kind of an undiscovered manager, so this would be some good, independent third-party endorsement of the work that these guys have been doing.”
In the cutthroat world of mutual funds, every little bit of marketing mileage helps.
New York-based OppenheimerFunds Inc., which won Lipper’s award for best overall large fund group last year, saw net inflows into its stock and bond funds rise about 13% in 2006, according to Boston-based Financial Research Corp.
Less than a year later, OppenheimerFunds’ assets topped $250 billion for the first time.
“The Lipper awards are important to our business success, and sales and marketing efforts, as they reaffirm our commitment to delivering strong consistent long-term performance for our shareholders,” John V. Murphy, OppenheimerFunds’ chief executive, said in a statement.
OppenheimerFunds was so proud of its accomplishment that it noted the 2006 Lipper award in its proposal to run Illinois’ 529 college savings plan. It eventually won the business, displacing Baltimore-based Legg Mason Inc.
Davis New York Venture Fund managers Christopher Davis and Kenneth Feinberg were named, by Morningstar of Chicago, 2005 Domestic-Stock Fund Manager(s) of the Year, a fact noted in a “Fund Overview” section on the website of
Tucson, Ariz.-based Davis Funds.
Morningstar’s 2005 awards were announced four days into 2006, a year when Davis New York Venture’s net inflows rose nearly 55%, according to FRC. The fund had more than $500 million in net inflows each month from January through April 2006, its best four-month stretch in at least two years.
Even so, Lynette DeWitt, FRC’s associate director of retail investment markets, cautioned against reading too much into an award’s effect on net sales.
“It is highly difficult, if not impossible, to attribute sales to specific marketing events,” she said.
Some financial advisers said they care little about such awards.
“I don’t put much stock in them,” said Joseph Baker, president of ALCUS Financial Group LLC in Mount Pleasant, S.C., which manages more than $35 million for clients.
Although such awards might be a good starting point to screen out the majority of fund managers, he doesn’t use them in setting up portfolios for clients, he said.
Awards may even encourage the short-term approach to investing that such companies as New York-based Lipper and Morningstar rail against, said Evelyn Zohlen, president of Inspired Financial LLC.
“On a year-in-and-year-out basis, one mutual fund company winning this year and a different one winning next year almost re-affirms our thought that you need to go with just solid research on a fund family that will provide consistent year-over-year results,” she said. “The rest is just noise.”
Still, Ms. Zohlen, whose fee-only Garden Grove, Calif.-based firm oversees about $50 million in assets, admitted that she does pay attention to who wins, because after such awards, her firm sometimes receives an e-mail or phone call from a client asking about the winners.
“We want to be prepared when they ask about, ‘Oh, I saw that so-and-so was the fund manager of the year with Morningstar; what do you think about that?’” Ms. Zohlen said.
From an investment management perspective however, “it has almost no impact on our decisions on investment selections for our clients,” Ms. Zohlen said.
To be sure, receiving recognition in the form of an award isn’t a sure-fire ticket to fame and fortune.
After it was announced in late March 2006 that the managers of Janus Mid Cap Value Fund won a 2006 S&P/BusinessWeek award, the fund netted $46 million in April, $20 million less than it brought in the same month a year earlier, FRC said.
For all of 2006, the fund had net inflows of $367 million versus inflows of $890 million in 2005, according to FRC.
“Our funds have won a number of awards in recent years, and we’re glad that our strong performance has been recognized,” said Janus spokesman James Aber. “We remain focused on providing consistently strong performance.”
