Legendary Fidelity Mutual Fund manager Peter Lynch once called investing an art, and the way Lynch went about it, famously spotting his “ten-baggers” by keenly studying the world around him, it was. In fact, the mutual fund industry has more than its share of Old Masters: To Lynch’s lofty status, add John Templeton, Jean-Marie Eveillard, and Bill Miller – investors who have elevated stock picking to an art form. But the mutual fund world is constantly changing.
And while many of those legends are alive and well, as years pass they make room for a fresh round of investing talent. You may not recognize Chuck Akre or Mark Yockey the same way you do Peter Lynch, but they are talented investors whose returns over time have come to speak for themselves. If Lynch and his ilk are the Old Masters, call these more recent stars the New Classics.
Old or new, one thing’s for sure: With the stock market booming or swooning depending on the news of the day, it’s more worthwhile than ever to have one of these steady hands guiding your investment decisions. So we set out to find the true artists of today’s mutual fund world: standout, managers who, while their specific styles may differ, have become leaders in their field.
How did we find them? We started by screening for funds that have outperformed their peers by the widest margins over the past ten years, using data from fund-tracking firm Morningstar. To make sure our choices would be easy to buy and affordable to own, we ruled out names that were closed to new investors and focused only on no-load offerings with minimum investment requirements of $25,000 or less. We also limited our picks to funds with expense ratios lower than the average for their category. Finally, we eliminated specialized funds, as well as those whose current managers were too new to be primarily responsible for the fund’s performance record.
That long list of criteria helped whittle our choices down to six funds: two large-cap, one mid-cap, and one small-cap fund, as well as two international offerings. (For investors seeking a more focused emerging markets fund, our pick from last year – T. Rowe Price Emerging Markets Stock [PRMSX] – has continued to post dazzling results. Lead manager Chris Alderson now also manages the T.Rowe Price Africa & Middle East fund [TRAMX], which opened in September.)
Some of the managers here are indeed Old Masters, respected veterans whose names roll off the tongue: Ken Heebner and Bill Nygren, for instance. But you may not recognize some others – the team from Manning & Napier, for example, has gone largely, and undeservedly, under the radar. But take our word for it.
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