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3 Funds Run by Topnotch Managers

We look at the nominees for Morningstar's Outstanding Portfolio Manager award and their funds.

Susan Dziubinski: Hi, I'm Susan Dziubinski for Morningstar. Last month, we introduced the Morningstar Awards for Investing Excellence. We nominated several topnotch professionals for the Outstanding Portfolio Manager award. Here is a look at some of the nominees and their funds. All of these funds are currently open to new investors.

Robby Greengold: Joel Tillinghast has managed Fidelity Low-Priced Stock for nearly 30 years. Since the fund's 1989 inception, Tillinghast has steadily built one of the finest track records of any fund in the mid- or small-cap Morningstar Categories. He has achieved that by reliably preserving shareholder capital while participating healthily on the upside. And that pattern derives from Tillinghast's extraordinarily methodical approach, his ability to spot high-quality companies, and his refusal to chase short-term fads. This portfolio is broadly diversified across hundreds of companies, and for each of those positions, Tillinghast focuses on the long run. Tillinghast is really looking for resilient businesses that have staying power. What that means in practice is that he is avoiding, or he is trying to avoid, companies that lack an enduring competitive advantage. He steers clear of companies that are loaded up on too much debt. And he looks for honest, capable management that he feels like he can invest with for the long run. Almost without fail, this strategy has offered equity investors refuge during periods of market volatility. And with Tillinghast's steady hand at the wheel, we continue to have high confidence in this Silver-rated fund.

Sarah Bush: In his nearly three decades with Loomis Sayles Bond, Dan Fuss has followed an often contrarian and deep-value approach to bond investing. Today he is joined by a team that includes comanagers Elaine Stokes, Matt Eagan, and Brian Kennedy, and the portfolio managers have a wide investment mandate that includes all types of bonds, including junk bonds, nondollar U.S. currencies, and even the occasional common stock. This makes for an aggressive strategy with the potential for big drawdowns. But over the years, the team's deep research and willingness to go against the crowd has resulted in big wins for the fund and for shareholders. These wins include investing in troubled Irish sovereign debt, investing in financials in Europe at the height of that area's difficulties, and more recently buying high-yield in 2014 and 2015 when that sector ran into trouble. For those who stuck with the fund over the long haul, the returns have been impressive. This remains a strong choice for those with the requisite patience and risk tolerance.

Alaina Bompiedi: Baird Aggregate Bond is stewarded by Outstanding Portfolio Manager nominee Mary Ellen Stanek and a tenured staff of five comanagers. It has achieved one of the best long-term records in its category with a straightforward and circumspect approach. On the surface, Stanek and team ply a deceptively simple process, but the devil is in the details. Each bond in the portfolio represents a strategic over- or underweight versus its size in the Bloomberg Barclays Aggregate Bond Index. This practice is complemented by a valuation-sensitive sector rotation, while the fund's duration is kept neutral to the benchmark's so as to inhibit volatility from interest rates. The fund's returns thus don't veer too far away from its index but have nonetheless been additive over time. Stanek's contributions extend outside this portfolio, too. As Baird chief investment officer, Stanek has aligned staff incentives with portfolio performance, encouraged employees' career development, and was an early advocate for low fees across Baird's fund complex. The fund's retail share class has had an expense ratio of 55 basis points since its launch in 2000. That fee was low then and continues to be low today relative to its competitors. This thoughtfully designed, predictable portfolio has served investors well and continues to instill confidence.

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