Morningstar : Announces 2014 U.S. Fund Manager of the Year Award Winners

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Morningstar Announces 2014 U.S. Fund Manager of the Year Award Winners

CHICAGO, Jan. 21, 2015-Morningstar, Inc. (NASDAQ: MORN), a leading provider of independent investment research, today announced its 2014 U.S. Fund Manager of the Year award winners. The winners will be featured in live segments on CNBC this afternoon. The awards acknowledge managers who not only delivered impressive performance in 2014, but who have also shown excellent long-term risk-adjusted returns and have been good stewards of fund shareholders' capital. This is the 28th year Morningstar has presented Fund Manager of the Year awards. To recognize outstanding fund managers each year, Morningstar selects leaders in five categories: domestic stock, international stock, fixed income, alternatives, and allocation. The 2014 Fund Manager of the Year award winners in the United States are: Domestic-Stock Fund Manager of the Year: The team from PRIMECAP (Theo Kolokotrones, Joel Fried, Al Mordecai, Mohsin Ansari, and James Marchetti) Recognized for: PRIMECAP Odyssey Aggressive Growth (POAGX) PRIMECAP Odyssey Growth (POGRX) PRIMECAP Odyssey Stock (POSKX) Vanguard Capital Opportunity (VHCOX) Vanguard PRIMECAP Core (VPCCX) Vanguard PRIMECAP (VPMCX) The PRIMECAP team runs six funds, three PRIMECAP funds and three subadvised Vanguard funds. All six funds have a Morningstar Analyst Rating™ of Gold, the company's highest Medalist rating, with Positive scores for all five pillars-Process, Performance, People, Parent, and Price. In 2014, all of the funds generated returns greater than 13.5 percent, ranking in the 11th percentile or better in their categories; four of the six finished in the top 1 percent of their categories. Three of the managers have more than $1 million invested in each of the six funds, and two managers have between $100,000 and $500,000 invested in each. The PRIMECAP team previously won Morningstar's Domestic-Stock Fund Manager of the Year award in 2003 for Vanguard PRIMECAP and Vanguard Capital Opportunity. "The long-term record of these winning PRIMECAP funds is outstanding. The team has made a lot of money for many people at a low cost. All six funds place in the top 5 percent of their categories over the trailing 10-year period, and Vanguard PRIMECAP and Vanguard Capital Opportunity have 15-year records that respectively rank in the top 2 percent and top 1 percent of the large-growth category," Jon Hale, Morningstar's director of manager research, North America, said. "The PRIMECAP team's patient strategy paid off in a big way in 2014 with their large holdings in pharmaceutical and biotechnology stocks like Biogen Idec, Amgen, and Eli Lilly, which gained more than 20 percent each last year. Their airline holdings were also successful, as top holding Southwest Airlines more than doubled and United Continental Holdings, Delta, and American Airlines each gained more than 60 percent." International-Stock Fund Manager of the Year: Charles Pohl, Diana Strandberg, and team, Dodge and Cox International Stock (DODFX) The nine-person Dodge and Cox International Stock Policy Committee runs this fund, and each of the members has been with Dodge and Cox for more than a decade. The managers follow a patient value strategy with low turnover, as demonstrated by a few of their previously unpopular holdings. The team bolstered its position in ICICI Bank in 2013 when the price was tumbling, and the stock soared in 2014. Hewlett-Packard stock, which the managers stuck with during the years when most investors shunned it, also rose significantly. The fund also saw double-digit gains from long-time pharmaceutical holdings Novartis and Roche. Dodge and Cox International Stock has a Gold Analyst Rating from Morningstar with Positive ratings for all five pillars and lands in the top decile of the foreign large-blend category for the three- and five-year periods as well as for 2014. The team also won this award in 2004. "It was a challenge for international-stock funds to achieve gains in 2014, as many economies were sluggish, foreign currencies stumbled, and unrest in Ukraine and Russia negatively affected European companies. Dodge and Cox International Stock managed to end the year in the black with a 0.1 percent return versus the 3.9 percent loss of the MSCI ACWI ex-US Index and the category's 5.0 percent decline," Hale said. "Over the long term, the fund has posted strong returns and continues to land in the top quartile of its category, even though it is now the fourth-largest international-stock fund in the United States. In a move to protect current fund shareholders, the fund closed to new investors earlier this month." Fixed-Income Fund Manager of the Year: Ken Leech, Carl Eichstaedt, and Mark Lindbloom, Western Asset Core Bond (WACSX) and Western Asset Core Plus Bond (WAPSX) Silver-rated Western Asset Core Bond and Western Asset Core Plus Bond follow a straightforward process and bounced back from losses in 2008 to both land in the top decile of the Morningstar intermediate-term bond category over the past five years. For the trailing 10-year period, Western Asset Core Bond's 5.1 percent return places the fund in the top quartile of the category, while Western Asset Core Plus Bond's 5.7 percent return landed in the top decile. In 2014, the funds each gained more than 7.5 percent, beating both the category and the benchmark and benefiting from a contrarian position on long-term interest rates and security selection in the non-agency mortgage and investment-grade credit sectors. Leech and his team also won the award in 2004 for Western Asset Core Bond. "The performance of Leech, Eichstaedt, and Lindbloom really stood out in 2014, even as the Federal Reserve's quantitative easing program ended, long-term bond yields continued to fall, and a sell-off occurred in the broader emerging-markets space. Over the last few years, the team has deftly steered through rocky periods in the bond market," Hale said. "The firm is supported by more than 40 analysts, and the team has an average of 20 years of experience. Leech has been with Western since the early 1990s, Eichstaedt since 1994, and Lindbloom, with 30 years of investment experience, since 2006." Alternatives Fund Manager of the Year: Robert T. Jones and Ali Motamed, Boston Partners Long/Short Equity (BPLSX and BPLEX) Robert Jones took the reins at Boston Partners Long/Short Equity in 2004, and Ali Motamed has been with the fund since 2003; Motamed was named a portfolio manager in 2013. Morningstar recently upgraded the fund's Analyst Rating to Silver from Bronze, with Positive ratings for four of the five pillars. The fund has shown solid long-term performance, and its alpha generation, or outperformance relative to its level of market risk as measured by beta, was particularly attractive from 2008 through 2014. In 2014, the fund's 4.7 percent return was particularly notable given its low average net exposure of 34 percent and a weekly beta for the year of only 0.12. The firm has a history of closing funds before becoming too unwieldy, and Boston Partners Long/Short Equity has been closed to new investors since 2010. "The management team isn't afraid to make drastic moves to benefit fund shareholders. For example, the fund added an array of small-cap stocks to the portfolio starting in 2008, leading to unrivaled success in 2009 and 2010. More recent performance has generated a large amount of alpha, with success from short holdings in 3D Systems, Netflix, and Twitter," Hale said. "Both Robert and Ali are committed to the strategy, each investing more than $1 million. We recently upgraded our Parent pillar rating to Positive for Boston Partners because we've seen the firm deliver a clear and consistent research process to produce good outcomes for fund shareholders." Allocation Fund Manager of the Year: Anne Lester and team, JPMorgan SmartRetirement Target-date Series (JSIIX, JSFIX, JTTIX, JNSIX, JSMIX, SRJIX, SMTIX, JSAIX, JTSIX, and JFFIX) By the end of 2014, target-date funds represented the largest category in the allocation space with more than $700 billion in assets and approximately $50 billion in inflows last year. Anne Lester has led the JPMorgan SmartRetirement team since the series' inception in 2006, and all of the fund's managers have spent their investment careers at J.P. Morgan. The series' glide path has a more conservative bent and is more diversified than many of its peers. With a Silver Morningstar Analyst Rating, the series also has Positive ratings for all five pillars after Morningstar upgraded the Parent pillar in December 2014. In 2014, each fund in the series returned more than 5 percent, and the three-year annualized return is between 7 and 17 percent for each fund. This is the first time a target-date fund series has won Morningstar's Allocation Fund Manager of the Year award. "The team has navigated various market environments with great success and posted outstanding performance in 2014. Strategic asset allocation, manager selection, and tactical decisions all contributed to the series' strong showing last year," Hale said. "In 2014, its funds, on average, ranked in the 8th percentile of their respective peer groups and outperformed their category averages by 2.2 percentage points. Since the series' inception, the average rank of its funds has never fallen into the bottom third on a calendar-year basis." For Morningstar's article about the winners, please visit http://www.morningstar.com/goto/fmoy2014. For the complete list of past and current winners, go to http://corporate.morningstar.com/FMOYhalloffame. Established in 1988, the Morningstar Fund Manager of the Year award recognizes portfolio managers who demonstrate excellent investment skill and the courage to differ from the consensus to benefit investors. The Fund Manager of the Year award winners are chosen based on Morningstar's proprietary research and in-depth qualitative evaluation by its manager research analysts. To qualify for the award, managers' funds must have not only posted impressive returns for the year, but the managers also must have a record of delivering outstanding long-term risk-adjusted performance and of aligning their interests with shareholders'. Nominated funds must be Morningstar Medalists-a fund that has garnered a Morningstar Analyst Rating of Gold, Silver, or Bronze. The criteria are available here. For more information about the Morningstar Awards, please visit http://awards.morningstar.com. About Morningstar, Inc. Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offers an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors. Morningstar provides data on approximately 479,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 13 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries and had approximately $169 billion in assets under advisement and management as of Sept. 30, 2014. The company has operations in 27 countries. Analyst Ratings are subjective in nature and should not be used as the sole basis for investment decisions. Analyst Ratings are based on Morningstar's current expectations about future events and therefore involve unknown risks and uncertainties that may cause Morningstar's expectations not to occur or to differ significantly from what was expected. Morningstar does not represent its Analyst Ratings to be guarantees nor should they be viewed as an assessment of a fund's or the fund's underlying securities' creditworthiness. The references above should not be considered a solicitation by Morningstar to buy securities. # # # ©2015 Morningstar, Inc. All Rights Reserved. MORN-R