Check out the winners, and discover what makes them stand out.
The 2016 Morningstar Fund Managers of the Year distinguished themselves in a period marked by geopolitical surprises and market headwinds, including redemptions as many investors moved their assets to passively managed index funds. Our winners bucked those trends and delivered outstanding performance, consistent with a strong long-term record and shareholder-friendliness. This year’s award winners have exemplified patience, resolve, and nerve over long and successful tenures.
To be nominated for Fund Manager of the Year, the manager’s mutual fund must be among the 1,200 that receive Morningstar Analyst Ratings and earn a rating of Gold, Silver, or Bronze. The medal rating indicates that our analysts believe a fund will outperform its category peers and/or benchmark on a risk-adjusted basis over the long haul. Looking at their individual coverage lists, analysts nominate Morningstar Medalist funds that have strong recent and long-term risk-adjusted returns, excellent stewardship practices, and broad shareholder bases. Our asset-class teams whittle down the list to a group of finalists. Then the entire analyst team meets to debate the merits of the finalists in each category, and, following those discussions, analysts vote to determine the winners.
Here are the 2016 winners, followed by our analysts’ takes on what makes them stand out:
Domestic-Stock Fund Manager of the Year
T. Rowe Price Mid-Cap Value TRMCX
2016 Return: 24.3%
2016 Morningstar Category Rank (Percentile): 8
Manager David Wallack has successfully used a contrarian approach at this Gold-rated fund (closed to new investors since 2010) for the past 16 years. In addition to relying on T. Rowe Price's deep analyst team, Wallack puts his own stamp on the fund, incorporating unique insights to find out-of-favor companies that are ripe for a turnaround.
For example, Wallack upped the fund's energy stake in early 2016, driven by a handful of attractively valued companies that he considered to be financially strong enough to weather further pressure in the sector. This move stood out, not only for its effectiveness but also because most of T. Rowe Price's equity funds had underweightings in the sector.
Energy wasn't even the biggest driver of the fund's top-decile 24.3% gain in 2016. Successful stock-picking across a variety of sectors fueled performance and was especially impressive considering the fund's 6%-8% cash position during the year. The fund's contrarian nature can lead to lumpy short-term results at times, but it has added up to strong risk-adjusted performance during Wallack's tenure. The fund’s Sortino ratio over Wallack’s tenure is 4.89 compared with 3.10 for the Russell Mid Cap Value benchmark and 2.46 for the mid-value Morningstar Category.
International-Stock Fund Manager of the Year
Oakmark International OAKIX
2016 Return: 7.9%
2016 Morningstar Category Rank (Percentile): 3