For these managers, the long run truly means the long run.
A highlight of the June Morningstar Investment Conference in Chicago was the panel featuring the "quarter-century club." Before an attentive audience of 1,800 financial advisors and individual investors, three highly regarded mutual fund managers--Brian Rogers of T. Rowe Price Equity Income PRFDX, Will Danoff of Fidelity Contrafund FCNTX, and Susan Byrne of GAMCO Westwood Equity WESWX--shared lessons, advice, and stories gained during 25 years of running the same fund for the same firm. (Danoff's tenure at Contrafund began in 1990, but he had joined Fidelity four years earlier.)
After listening to these veterans speak, I decided to look at the roster of other managers who have been at the controls of the same fund for an inordinate amount of time. The list is longer than I would have guessed, even taking into account that some may have been serving more as figureheads or strategists rather than hands-on portfolio managers for part of that time.
But another fact also stood out: Rogers isn't the only manager at T. Rowe Price with an exceptionally long stint at the same fund. Four other managers at that firm either recently passed the 20-year mark or are close to that milestone. And though they certainly have had help, they have been the sole listed manager of their funds for all or most of that time; they aren't just one element in a large manager team.
Preston Athey, T. Rowe
Price Small-Cap Value PRSVX
When Preston Athey took the helm of this offering in the summer of 1991, it was a three-year-old fund with less than $50 million in assets. It now has $7 billion. Over Athey's long tenure, its return has comfortably beaten the Russell 2000 Index, the Russell 2000 Value Index, and the averages for all three small-cap categories. That helps explain its meteoric asset growth. A hefty asset base poses a challenge for a small-cap fund, but Athey has handled the growth well; performance in recent years has remained impressive.
It almost seems that upon taking the helm nearly 21 years ago, Athey was already planning on settling in for a lengthy tenure. In 1992, his first calendar year as manager, the fund's turnover rate was just 12%, minuscule for any type of equity fund. It has been in that range ever since. That's likely one reason its large asset base hasn't slowed the fund down. A big asset base can make it difficult to trade small stocks efficiently, but it's less of a problem if the manager limits his trading.
Gregory McCrickard, T. Rowe
Price Small-Cap Stock OTCFX
It would be impressive if T. Rowe Price had just one small-cap manager with a 20-year tenure, but barring any unforeseen events, Greg McCrickard of T. Rowe Price Small-Cap Stock will soon become the second. (A third, Jack LaPorte, ran T. Rowe Price New Horizons PRNHX for 22 years before retiring in 2010.) McCrickard took the reins in early September 1992, when T. Rowe assumed the management duties from another advisor.
As with Athey's fund, this one has posted impressive performance over McCrickard's entire tenure as well as in recent years, even as its asset base has grown. (It now has $6.8 billion in its coffers.) Other similarities include low turnover, which has been between 15% and 25% almost every year, and a tendency to lose less in market downturns than most peers do. McCrickard and Athey rely on many of the same analysts at T. Rowe, and some of the same names show up in their portfolios, but the funds are far from clones. This fund leans more toward the growth side of the spectrum than Athey's Small-Cap Value portfolio, for instance.
Brian Berghuis, T. Rowe
Price Mid-Cap Growth RPMGX
There may be cake and balloons adorning Brian Berghuis' desk as you read this as he he hits his 20th anniversary at the helm of T. Rowe Price Mid-Cap Growth (it's the fund's 20th birthday, as well). With turnover rates in the 30%-40% range, Berguis has not been quite as patient an investor as Athey and McCrickard, but he's far from a rapid trader. In fact, more than half of the top 25 holdings in the most-recent portfolio were first bought in 2007 or earlier, and the fund's overall turnover rate is consistently less than half the mid-growth norm. That's a good thing, as this fund has grown to $17.5 billion in assets and is less nimble than it once was. It is now closed to new investors.