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Announcing Morningstar's Managers of the Year for 2010

These managers had more than just the wind at their backs.

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The markets were good to mutual funds in 2010, as most managers continued to climb their way back from losses incurred between 2007 and early 2009. Growth led value. Small caps led large caps. Emerging markets shone brighter than many developed ones. And equities were well ahead of fixed-income investments. Funds with healthy doses of industrial, consumer discretionary, and real estate holdings were rewarded. Meanwhile, lagging financial and health-care stocks created a drag for funds with significant stakes in those sectors.

As with any investment backdrop, some fund managers' styles were in favor and helped elevate them to the top of the performance charts. Yet, our winners' great returns cannot solely be explained by an ephemeral stylistic tailwind. We look for managers who nailed the past year on the heels of much lengthier success, and we measure this success not only by observing trailing performance, but also by reviewing managers' research and actions over time.

Morningstar gives three awards each year: Domestic-Equity Manager of the Year, International-Stock Manager of the Year, and Fixed-Income Manager of the Year. In early December, fund analysts specializing in those fields narrow down the universe to five nominees for each award, and the winner is then selected by Morningstar's entire team of mutual fund analysts. To make the most informed decision, we comb through portfolios, returns, stewardship, and our own long institutional memory of these funds as we debate and vote. While the award has always distinguished the past calendar year, we've never simply chosen the highest-returning funds. We favor managers who have achieved strong risk-adjusted performance through the careful execution of a solid investment strategy. And we esteem good stewards of investors' capital.

Karen Dolan does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.