Today, Morningstar revealed the winners of the 2022 Morningstar Awards for Investing Excellence in two categories: Outstanding Portfolio Manager and Exemplary Stewardship. The winners of both awards demonstrate the industry's very best attributes, including investment skill, the courage to differ from the consensus to benefit investors, and an alignment of interests with the strategies' investors.
Morningstar's manager research analysts chose the winners from short lists of nominees that they compiled based on the criteria in each category. The analysts considered in-depth qualitative evaluations of each nominee and then voted for those they found most deserving.
The Outstanding Portfolio Manager nominees have distinguished themselves by staying true to their processes, building strong research teams, and delivering topnotch long-term returns. Morningstar analysts pick nominees from investment strategies that earn Morningstar Analyst Ratings of Silver or Gold for at least one vehicle or share class. These nominees have navigated multiple market cycles over their tenures and remain among the best in their respective asset classes. They also invest significant sums alongside their strategies' investors.
Firms nominated for the Exemplary Stewardship Award have each carefully nourished an "investors first" culture that shows in strong results for shareholders. Eligible candidates must have earned a Morningstar Parent Pillar of High, signaling Morningstar’s highest conviction in their stewardship of investor capital. Few U.S. investment firms qualify for this elite cohort. Each has built and nurtured investment and commercial cultures that stand above the competition.
The winners are:
Outstanding Portfolio Manager
Mary Ellen Stanek, Baird Asset Management In her more than 22 years at Baird Asset Management, Stanek has stayed true to her disciplined and risk-aware approach, thoughtfully navigating various market environments. As CIO of the firm, Stanek leads all of Baird's taxable fixed-income strategies. These include Baird Core Plus Bond BCOIX and Baird Aggregate Bond BAGIX, which have attracted strong flows and have generated impressive absolute and risk-adjusted returns over Stanek's October 2000 through March 2022 tenure.
While lacking the giant analyst benches of some of the larger fixed-income rivals, Stanek leads a nimble, tight-knit team that plays to its strengths. The eight-person squad consists of longtime veterans who arrived with Stanek in 2000 and midlevel leaders who have matured within her organization. There have been a couple of retirements among the old guard, but otherwise her analyst bench has grown steadily and seen few departures, reflecting Stanek’s focus on employee development and retention. She has expanded the team’s resources to handle its growing business and has fostered a culture that encourages the voices of both senior collaborators and newer associates.
Stanek has an investors-first mentality. Long before it was the industry norm, Stanek and her team launched strategies with some of the lowest fees available among actively managed peers; the managers don't have to take on more risk to clear their price hurdles and beat their respective benchmarks. Stanek and her team also produce comprehensive educational content on fixed-income markets for investors and own large stakes in the funds they run.
Primecap Primecap, a U.S.-stock-focused investment boutique, can be contrarian but generally follows a growth-oriented philosophy. The firm offers just three funds under its own Primecap Odyssey brand, but it has been a key subadvisor for Vanguard since November 1984, just 14 months after Primecap's founding. In fact, Vanguard remains its largest client. Vanguard's Primecap offerings are unsurprisingly cheap, but the Primecap Odyssey bunch is also very competitively priced. Although at times the firm's high-conviction portfolios can endure rough stretches of performance, Primecap's strategies boast excellent long-term results overall.
Primecap uses a multimanager approach to running its strategies, which helps with capacity management, succession planning, and portfolio-manager transitions. Its portfolio managers are also deliberate and engaged in the long-term strategy and management of the firm, and they have made some uncommon but exemplary choices. For example, they have prioritized investment results for a select number of clients over expanding the firm’s reach across the globe and into asset classes beyond equities; although Primecap managed $153 billion as of December 2021, its fund lineup remains straightforward and focused compared with most. The firm has also proved capacity-conscious in closing one of its Odyssey strategies to new investors. (All of its Vanguard funds currently have limited availability.)
Investment talent recruitment is another area where Primecap stands out. Three firm principals and portfolio managers directly involve themselves in the process. They often hire standout, culturally aligned MBA graduates even when there is no immediate need and even when the candidates had not explicitly considered investment careers.
Gabe Denis, Bridget Hughes, Alec Lucas, and Paul Ruppe all contributed to this article.