Runners-Up for Manager of the Year

We want to recognize our runners-up for Morningstar Manager of the Year 2010. These are managers who did outstanding jobs for investors and finished second in our analysts' vote. The Manager of the Year award is really more of a Hall of Fame recognition. We want to recognize managers who have made a lot of money for investors over the long haul and done so in a way that shows they take their duties to shareholders seriously. Our Analyst Picks, meanwhile, are meant as recommendations of what to own for the next 10 years. Click  here to see them.

Many past runners-up have gone on to win Manager of the Year. For example,  Vanguard Capital Opportunity (VHCOX) managers Howard Schow, Theo Kolokotrones, and Joel Fried were runners-up in 1999 with a 99% return but went on to win in 2003. That same year,  American Funds EuroPacific Growth (AEPGX) was a runner-up, and it won in 2009. In 2004,  Loomis Sayles Bond's  (LSBRX) Dan Fuss and Kathleen Gaffney were runners-up, and they claimed the prize in 2009. In 2005, Jeffrey Gundlach at  TCW Total Return Bond  (TGLMX) was runner-up but brought home the prize in 2006.

This year we are naming runners-up for domestic-stock and fixed-income. We are not naming an international-stock runner-up because no clear second-place finisher emerged in our vote for Manager of the Year. Click here to see the nominees.

Runner-Up Domestic-Stock Manager of the Year: Rick Aster Jr.
In 1984, Rick Aster Jr. launched  Meridian Growth (MERDX). Since that time, the fund has gained a cumulative 2,203% compared with a 952% gain for its benchmark. Now that's adding value.

Aster's strategy was well suited to the value-driven aughts. He wants steady double-digit growth, but he maintains a strict valuation discipline. In addition, he buys for the long haul and that keeps him away from Icarus-type stocks that fly high only to get burned.

His steady approach has worked well for shareholders as evidenced by the fund's investor returns, which are an estimate of how the fund's typical investor has fared. Its 10-year investor return through the end of December 2010 is 8.25%--top 11% in mid-growth--and its 15-year investor return is 8.9%--top 12%. The fund lost less in bear markets and gained as much or more than its peers in rallies. That's not easy to pull off, but it's the best formula for keeping investors on board through tough times so that they are around for the good times.

Runner-Up Fixed-Income Manager of the Year: Metropolitan West Team
Amid all the controversy over Jeffrey Gundlach's firing from TCW, not many people noticed that the MetWest team that took over did an excellent job at  TCW Total Return Bond (TGLMX) and  Metropolitan West Total Return Bond (MWTRX).

Stephen Kane, Laird Landmann, and Tad Rivelle produced returns of 11.5% for 2010 and 6.9% annualized over the past 10 years on Metropolitan West Total Return Bond. Both figures land in the top decile of the intermediate bond fund category. Going back to March 1997 when the MetWest fund was launched, it has gained a cumulative 171% compared with 137% for its Barclays Capital U.S. Aggregate Bond Index benchmark. At the TCW fund, they produced a 10.3% gain for 2010 despite having to manage significant redemptions in Gundlach's wake.

MetWest has done an excellent job picking nonagency mortgages and with its broader macro calls. While the team is fairly aggressive with some of its bets, Kane, Landmann, and Rivelle don't take any foolish risks, and that's helped them to sail through the bond market's crazy mood swings.

MetWest won our Manager of the Year award in 2005.

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