Today, Morningstar reveals the nominees for the Morningstar Awards for Investing Excellence--Rising Talent. Nominees for the Morningstar Awards for Investing Excellence were announced on Monday, and the nominees for the Exemplary Stewardship award will follow next week. Winners for each award will be announced at the 2019 Morningstar Investment Conference in May 2019.
Morningstar analysts nominated four candidates across asset classes for the Rising Talent award. Nominees must run an investment strategy with a Morningstar Analyst rating of Bronze or higher or be featured in Morningstar Prospects, a publication that highlights strategies under consideration for full analyst coverage. Nominees must have public portfolio management experience of seven years or fewer and have delivered promising results over that period.
This year’s nominees span the asset-class and market-cap gamut. They include both sole portfolio managers and standouts from team-managed offerings.
Pramod Atluri joined Capital Group and became a named comanager on Bronze-rated American Funds Bond Fund of America (RBFGX) in early 2016. He began his career as an analyst at Fidelity in 2004 and rose to comanager of various funds in Fidelity’s core bond suite in 2012, where he worked alongside veteran manager Ford O’Neil. Capital Group’s 2016 decision to recruit Atluri was part of its multiyear evolution, which involved bringing on experienced external hires bolstering its risk systems and streamlining macroeconomic research across fixed-income offerings. Atluri has emerged as a clear leader in these efforts as he’s applied his skill set and experiences to help make improvements in these areas.
Atluri now oversees a sleeve of Bond Fund of America alongside six other managers. At year-end 2019, however, Atluri will assume the role of principal investment officer for this flagship fixed-income strategy from the retiring John Smet. In this position, he’ll monitor aggregate exposures at the fund level, incorporating feedback from the firm’s risk and quantitative solutions team to make necessary adjustments. The role will be a new opportunity for Atluri, but his recent leadership experience and risk-conscious, value-oriented approach to core bond investing should serve shareholders well.
James Marchetti represents the next generation of talented investors at growth equity boutique PRIMECAP. Marchetti has been a named manager on PRIMECAP Odyssey Aggressive Growth (POAGX), PRIMECAP Odyssey Growth (POGRX), and PRIMECAP Odyssey Stock (POSKX) since November 2014; and Vanguard Capital Opportunity (VHCOX), Vanguard PRIMECAP (VPMCX), and Vanguard PRIMECAP Core (VPCCX) since January 2015. All six strategies receive Gold ratings.
Marchetti joined the firm in 2005 as a biotech analyst following graduate school at MIT. PRIMECAP has long invested heavily in biotech stocks, and successful biotech picks have been a major factor in the outstanding performance of PRIMECAP’s six strategies during Marchetti’s tenure at the firm despite providing occasional headaches. Marchetti is listed alongside four fellow comanagers, and while PRIMECAP doesn’t release results of individual sleeve managers, attribution indicates that Marchetti's contributions are significant. PRIMECAP has a long-standing record of investment excellence and doesn’t often add to its managerial ranks. Marchetti’s ascent suggests he will be a cornerstone for the firm’s future.
Vincent Montemaggiore’s value- and quality-oriented process stands out at Fidelity, where most managers prioritize earnings. He joined the firm full-time as an analyst in 2005 and, after stops at a few sector funds, took over Fidelity Overseas (FOSFX) in 2012, currently rated Silver. The fund has fared quite well over Montemaggiore’s tenure, beating its benchmark and peer group with less volatility. Thanks to Montemaggiore’s focus on stocks with higher profitability metrics than the portfolio’s MSCI EAFE benchmark and foreign large-growth Morningstar Category peers, the fund also has an enviable upside/downside-capture ratio.
Montemaggiore’s introspective nature stands out. He keeps a journal of all stock picks that he revisits regularly to be sure the thesis remains intact and also tracks lessons learned from mistakes. Montemaggiore, who has proven himself an adept stock-picker, performs most of the valuation work himself, making his inputs a critical part of his process. Encouragingly, attribution data shows he’s added value in stock-picking across sectors rather than benefiting from just one or two areas of the market, helping provide confidence in the fund’s staying power through various market environments.
Brett Sumsion joined Fidelity in 2014 to help overhaul its Fidelity Freedom Funds target-date series. He came from DuPont Capital Management, where he had more than a decade of experience in asset allocation. Alongside comanager Andrew Dierdorf, Sumsion helped reshape the Freedom Funds, boosting equity exposure across the series, initiating tactical allocation moves, and improving the mix of underlying strategies. These improvements helped support an upgrade in the series’ Analyst Rating to Silver from Bronze in early 2017.
Sumsion and Dierdorf have demonstrated a willingness to differ from peers. In 2018, they added long-term Treasuries into the asset class mix to address the risk of deflation, a nonconsensus move. Such tactical moves, often driven by Sumsion, are uncommon amongst peers but have proven beneficial here. Since Sumsion joined in 2014, the series’ funds have on average outperformed more than 80% of peers, thanks to an above-average strategic equity weighting, strong manager selection, and additive tactical moves.
Morningstar analysts Emory Zink, Alec Lucas, Jack Barry, and Jeff Holt contributed to this column.
Christopher Franz, CFA has a position in the following securities mentioned above: POAGX. Find out about Morningstar's editorial policies.