Funds With Long-Tenure Managers

4/21/2014


For better or worse, fund portfolio managers come and go. Across U.S. large-cap stock funds, the average manager tenure is 6.2 years. Midcap managers average 6.4 years with a fund and small-cap funds 6.3 years. The typical tenure for bond funds is 5.4 years.

Some research shows that fund managers who have been on the job longer with the same fund tend to deliver better returns. But less than one-third of diversified U.S. stock funds have at least one manager with 10 years at the helm.

Most funds are run by a team of portfolio managers. In fact, only 29% of U.S. stock funds have a single manager. Among our 21 recommended funds, 10 have a single skipper, with the average tenure around nine years.

Importantly, a longer tenure makes a fund's track record more meaningful. And longtime managers often adhere to a consistent strategy or style, making their funds' relative performance a bit more predictable.

Our advice

The table below lists six funds that have at least one manager with more than 10 years' experience. All six have an average manager tenure that exceeds the category average and rank among the top one-fifth of their peers based on 10-year performance.

Two standouts are reviewed below.

John Thompson still manages Thompson Bond ($12; THOPX), a short-term corporate bond fund he started in 1992. The fund, yielding 2.6%, holds more than 500 bonds. Thompson Bond earns a fund score of 95 and ranks among the top 1% of its category for one-, three-, five-, 10-, and 15-year returns.


Vanguard Selected Value ($28; VASVX) ranks among the top 10% of midcap value funds for three- and 10-year returns. Lead manager James Barrow has been at the helm since 1999 and has worked in investment management since 1963.  

FUNDS WITH VETERAN MANAGERS
--------- Portforlio Manager Summary ---------
Tenure In Years
-------- (Category Average) --------
--- Annualized Return ---
Fund (Price; Ticker)
No. Of
Managers
--- Average ---
Longest
---- Serving ----
3
Years
(%)
5
Years
(%)
10
Years
(%)
Exp.
Ratio
(%)
Fund
Rank
Category
Artisan International
($29; ARTIX)
3
7.5
(4.9)
18.3
(6.8)
9.6
16.3
8.1
1.20
80
Int'l large-cap
blend
Fidelity High Income
($9; SPHIX)
1
13.8
(5.6)
13.8
(7.0)
7.5
15.2
8.0
0.72
52
High-yield
bond
Homestead Small Company
($37; HSCSX)
3
15.8
(5.5)
16.1
(7.1)
14.2
25.5
11.8
0.91
78
Small-cap
blend
Thompson Bond
($12; THOPX)
3
10.8
(6.3)
22.2
(8.2)
5.1
9.5
5.9
0.74
95
Short-term
bond
Vanguard Selected Value
($28; VASVX)
7
6.3
(5.9)
15.0
(7.3)
15.5
22.2
10.2
0.43
92
Midcap value
Vanguard Wellington
($38; VWELX)
2
11.8
(4.8)
13.3
(7.1)
10.9
14.8
8.1
0.26
99
Balanced

 

OUR RECOMMENDED MUTUAL FUNDS
Through April 15, our Growth Portfolio has dipped 1.9% so far this year, versus flat for its benchmark portfolio. The Conservative Portfolio is down 0.7%, versus a gain of 0.6% for its benchmark. For comparison, the S&P 500 Index is up 0.3%, while the Barclays Aggregate Bond Index is up 2.6%. Despite recent volatility, we are sticking with our current funds and allocations.
Year-To-Date *
--- % Of Portfolio ---
 
Fund (Price; Ticker)
Return
(%)
Rank
Conser-
vative
(%)
Growth
(%)
Fund
Rating †
Artisan International ($29; ARTIX)
(3.7)
E
9
9
80
Dreyfus Midcap Index ($37; PESPX)
(0.4)
C
0
0
60
Dreyfus Small Cap Stock Index
($29; DISSX)
(2.5)
C
0
0
91
Fidelity High Income ($9; SPHIX)
2.5
D
5
4
52
Homestead Small Company
($37; HSCSX)
(0.3)
A
5
8
78
PIMCO Total Return ETF
($107; BOND)
2.7
B
6
0
NA
T. Rowe Price Divers. Small-Cap Growth
($24; PRDSX)
(5.1)
C
9
9
91
T. Rowe Price Value
($34; TRVLX)
1.6
A
8
9
91
Thompson Bond ($12; THOPX)
2.4
A
6
0
95
Vanguard 500 Index ($170; VFINX)
0.2
B
6
7
79
Vanguard Dividend Growth
($21; VDIGX)
0.5
B
12
12
93
Vanguard GNMA ($11; VFIIX)
2.7
A
0
0
96
Vanguard Growth Index
($47; VIGRX)
(1.5)
B
11
11
84
Vanguard Inter.-Term Tax-Exempt
($14; VWITX)
3.5
B
0
0
92
Vanguard Selected Value
($28; VASVX)
(0.3)
E
5
7
92
Vanguard Short-Term Invest.-Grade
($11; VFSTX)
1.1
B
0
0
98
Vanguard Total Bond Mkt. Index
($11; VBMFX)
2.7
C
0
0
57
Vanguard Wellesley Income
($25; VWINX)
2.9
A
0
0
99
Vanguard Wellington ($38; VWELX)
1.8
A
6
9
99
Wasatch International Growth
($28; WAIGX)
(4.7)
E
7
8
65
Wells Fargo Advantage Discovery
($31; STDIX)
(8.6)
E
5
7
63

* Year-to-date ranks through April 15 from Morningstar, comparing performance among funds with same objectives. A = top 20%; B = next 20%; C= middle 20%; D = next 20%; E = bottom 20%.
† Fund ratings are percentile ranks based on our fund-rating system.


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