For These Funds, Seniority Hasn't Equaled Success
Despite having long-tenured managers, these funds haven't distinguished themselves.
Investors often take comfort in casting their lot with highly experienced managers. That's why legions of Berkshire Hathaway (BRK.A) (BRK.B) investors gathered to hear Warren Buffett's latest pearls of wisdom this past weekend, and it's why Bill Gross' PIMCO Total Return (PTTAX) has been an asset-gathering machine during the past decade. But not all managers have demonstrated the added benefit of experience in navigating various market climates over the long haul.
Using our Premium Fund Screener, we homed in on long-tenured managers that have not earned their keep. We started by sifting through the domestic-stock fund universe for distinct portfolios of noninstitutional offerings with managers who have helmed their funds for at least 10 years. We then layered on performance screens for funds that have ranked in the bottom 33% in their category for the trailing three-, five-, and 10-year periods. Finally, we eliminated funds with expense ratios less than the category average. The screener yielded more than 20 funds, three of which we've highlighted below. To replicate this screen, click here.
Chesapeake Core Growth (CHCGX)
Managers Whit Gardner and John Lewis subscribe to a disciplined approach that seeks to identify companies poised to beat Wall Street's earnings estimates. Although this strategy has yielded small spurts of chart-topping performance, it has not translated into consistent long-term success. For example, the managers stuck with their financials through the market rout of 2008 and early 2009, leading to woeful underperformance. The fund then took full advantage of 2009's rebound, and more recently, the opportunity to easily outpace its peers through March of 2010. But relative performance has taken took a sharp nosedive as its financial picks have struggled.
Esther Pak does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.