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Meet the U.S. Winners of Our Awards for Investing Excellence

Meet the U.S. Winners of Our Awards for Investing Excellence

Christine Benz: Hi, I'm Christine Benz for Morningstar. Morningstar recently named the winners of its Awards for Investing Excellence, selecting three winners in three categories. Joining me to discuss the award winners is Sarah Bush. She's Morningstar's director of manager research for North America. Sarah, thank you so much for being here.

Sarah Bush: Thanks for having me, Christine.

Benz: Sarah, let's start by discussing the thesis behind these awards. What are you and the team trying to do by making these awards each year?

Bush: What we're looking to do is to recognize extraordinary investors, recognize commitments to shareholder best interests, and also those who have been willing to differ from the consensus. The first two awards honor portfolio managers, and the first is the Outstanding Portfolio Manager award. You can think of this as a lifetime achievement award. We're looking to honor a manager who has really produced exceptional results for investors over the long haul.

The second award to portfolio managers is the Rising Talent award. So, here we're looking for someone who is earlier in their career, a manager who has less than seven years of experience, who's already shown exceptional promise and generated strong results but looking ahead to their promise as they go through their career.

The final award is our Exemplary Stewardship award, and here we really are looking at the asset manager, and we really want to identify asset managers who've shown an unwavering focus on investor interests, which is very important as we look at our methodology and understand what drives good fund performance over time.

Benz: Let's take a look at the Exemplary Stewardship award. There were three nominees for 2020. They included T. Rowe Price, Capital Group, which is the parent company of the American Funds, as well as Dodge & Cox. Let's talk about the award winner in this category.

Bush: The award winner is T. Rowe Price, and we've awarded this honor to T. Rowe Price to recognize its strong investment culture that's allowed them to flourish in a very difficult environment for active managers. T. Rowe Price is an equity powerhouse and also has built a very strong target-date franchise. Investors in its funds have benefited from long-tenured managers. They've been very thoughtful about manager transitions, managing capacity, and just investment alongside investors, alongside shareholders. One of the stories that came out as we were talking about T. Rowe Price, which I thought was really interesting, is that David Girioux, who is a portfolio manager and head of investment strategy at the firm, recently led a firmwide initiative to look at how to improve the life of analysts. And this is a firm that has--one of the things we think is really impressive about it is it really does have this very deep analyst bench. So we went out and spent a huge amount of time talking to people across the firm and came out of that experience with some very concrete measures. A couple that our analysts have told us about are finding ways to find deep-thought time during the day, so when you're disconnected from email and from other potential distractions, and also just solidifying expectations around what needs to go on an analyst note and how analysts and portfolio manager interactions happen, so that's just an example. This is a firm that has really innovated, puts a very high emphasis on that investment culture and getting it right and really thinks it's very important to build our analysts and portfolio managers can invest--can work and invest across their entire careers.

Benz: Now let's talk about the award for Rising Talent. There were four nominees in this category. They included John Dance from Fidelity, Wyatt Lee from T. Rowe Price, John McClain from Diamond Hill, as well as Mohit Mittal from Pimco. Who was the winner in this category, Sarah?

Bush: The winner was Mohit Mittal. He's named manager on a number of strategies including Pimco Investment Grade Corporate, where he's been since 2016. And he was actually recently, in late 2019, named as portfolio manager on Pimco Total Return. It's a very well-known fund, very important to the Pimco franchise obviously. And I think that speaks to the confidence that the firm has in Mohit. What we see in him--so Mohit leads the corporate credit portfolio manager team and has really done a lot, both as an individual investor but also to build that team's capability both to dig deep and find ideas that work in smaller corporate dedicated strategies but also to think about how to leverage the firm's corporate research to make decisions that impact the larger, more diversified portfolios such as Pimco Total Return.

I mean, he's very much impressed us in this time managing money. Our analysts point to his analytical talent, his quantitative skills and drive that's been key to his success at Pimco. And we all know that Pimco is a famously competitive organization. So those skills and talents have served him well in his career so far and I think will in the years to come.

Benz: Now, let's discuss the Outstanding Portfolio Manager award, which you describe as being akin to a lifetime achievement award. There were five nominees in this category: Chuck Akre, Joel Tillinghast from Fidelity, Mary Ellen Stanek from Baird, Jerome Clark from T. Rowe Price, as well as TCW's fixed-income management team. Let's talk about the winners in this area.

Bush: The winner was Jerome Clark. Jerome Clark is a pioneer of the target-date industry. He helped build T. Rowe Price's target-date lineup starting in 2002 when there were still just a handful of target-date funds. Our analysts cited his commitment to innovation and also the research-driven decisions that that team makes into asset allocation. So over his time running the funds, he took them from a fairly straightforward mix of U.S. stocks and bonds to a much more globally diversified portfolio. Those were all very well researched and documented decisions as they made those tweaks along the way. Through that time, a hallmark of the funds has been a high allocation to equities, and that really reflects Clark's view and the team's view that the biggest risk to retirees is that they do have a savings shortfall, that they outlive their savings. So that's been something that's been very important.

He's been a steady hand running these funds. He managed them through the global financial crisis, which was obviously a difficult time to have a lot of your target-date fund in equities. And I think he was a steadying presence during that time and actually took up the opportunity to opportunistically add to the funds' equity allocations during that time, which obviously turned out to be a very good decision and is one of the big drivers of the strong records that those funds do hold today. So overall, this is a series that has topnotch returns, and today it has more than $200 billion of assets, so the strength of the calls that he's made has really had a wide impact on a lot of different investors and their retirement savings.

Benz: Overall a really worthy slate of nominees and award winners. Sarah, thank you so much for being here to share them with us today.

Bush: Thank you very much for having me, Christine.

Benz: Thanks for watching. I'm Christine Benz for Morningstar.

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