In general, we like funds that exhibit certain traits that we've found more likely to provide success over the long term. For example, we tend to favor managers with low turnover--meaning they stick with their companies for years rather than trying to guess next quarter's trends--and who have the guts to put a meaningful portion of fund assets into a relatively moderate number of picks.
However, these and similar points are intended to serve as guidelines, not rigid rules. As it turns out, some outstanding managers disdain these habits--yet their long-term performance shows they know what they're doing. The following managers are not the only ones triumphing by taking approaches that typically lead to mediocrity, but they provide fine examples.
Frank Jennings, Oppenheimer Global Opportunities (OPGIX)
We tend to shy away from equity-fund managers who try to beat the competition by relying in part or in whole on their opinion about the overall level of the market. Even the smartest managers and market strategists--and economics professors and central bankers, for that matter--seem to misfire with such estimates at least as often as they hit the mark. Top-flight fund managers have a much better track record identifying specific companies that are in position to prosper yet are trading at bargain prices.
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Gregg Wolper has a position in the following securities mentioned above: JETAX. Find out about Morningstar’s editorial policies.