Hi Guys,
There are a very few rare gem current fund managers who are special. They are special and deserve consideration if they outdistance their benchmarks. Long term performance is perhaps the most significant criteria. I provide a reference that summaries the data in that arena:
https://www.forbes.com/sites/kenkam/2019/02/08/investing-with-the-greatest-mutual-fund-managers-2/#775ebd1e2a71This is good stuff, but caution must be exercised. From the referenced article: “ Out of about 7000 U.S. equity mutual funds in Morningstar's database only 199, roughly 3%, have fund managers who have beaten the S&P 500 by enough to make a difference and outperformed their category benchmark over the past 10 years. “.
Now that is really special, but unfortunately it measures a fleeting characteristic. Investment management is a tough business. Past success doesn’t always translate into future success. Change happens.
However, it just might be worth your time to visit the reference and examine “The List”. You just might improve your portfolio.
Best Regards.
Comments
Agree w/the above --- imho the 10 year chart is meaningless. I routinely look at 15, 20, and max timeframes now. For me a decent rule of thumb would be how much they lost in '08 .... if they didn't do too badly (by comparison to say the SPX) and were not wallowing in a huge cash pile, that implies they don't follow the herd and are thus worthy of my consideration.
In 2008, FLPSX returned -36.17%, less than the -33.79% return of its chosen benchmark (R2K, per prospectus). Personally, I would have chosen a benchmark such as the Russell Midcap Value index, as was used by JMCVX. That latter index returned -38.44% in 2008, per the JMCVX 2009 prospectus.
For completeness, the R2K value index returned -28.92% in 2008, and the S&P 400 midcap index returned -36.23% (both from the same Janus prospectus). FLPSX returned -20.73% in the fourth quarter of 2008 (from any FLPSX prospectus - that was its worst quarterly return).
Regarding Tillinghast's break, it was for four months, starting in Sept. 2011 and ending in January 2012. Given that FLPSX's best annual performance relative to its peers over the five years 2009 through 2013 was in 2011, it wouldn't appear that Tillinghast's temporary absence had any negative impact. And since both Fidelity and Morningstar report Tillinghast as the fund manager from 1989 to the present, a simple screening for continuous management wouldn't have excluded Tillinghast from consideration of best 10 year managers.
On the positive side, FLPSX did outperform its MCV peers in the 4th quarter of 2018 (-13.54% vs. -15.72%), though over the two quarters including that one and the 1st quarter of 2019, everyone lost the same amount of money: about 5%. The fund did a little better in providing protection in the 3rd quarter of 2015, when it lost 6.2% vs. 9.19% for its peers. Including the slight bounce back the next quarter, FLPSX still did better, losing about 5% overall, while this time its peers lost around 7%.
http://performance.morningstar.com/fund/performance-return.action?t=FLPSX
The figures are okay, but I'm not seeing anything in the numbers that scream "buy me". Is that it, or is there something else that leads you to feel this manager rules?
(FLPSX is not easy to compare fairly, prospectus notwithstanding, because of its usual large foreign slug, in some periods thought to be a good thing.)
Tillinghast is only 61yo, so if I were going to invest for 15 more years I would consider his work seriously.
Puglia is a bit younger.
Did not say it screams 'buy me'. Whose work does that for you? 'Absolutely rule' meant outperforms almost all others over that long haul. Whom do you have in mind for top rankings over the long hauyl?
am reading now about DCohen and Scherschmidt, at
https://www.forbes.com/sites/kenkam/2019/02/08/investing-with-the-greatest-mutual-fund-managers-2/#2c08d7db2a71
also these guys. Fried is sometimes mentioned in such articles.
https://www.forbes.com/sites/kenkam/2018/06/08/greatest-fund-managers-redux-4-that-are-keepers/#496a96a3554f
Puglia is not commonly mentioned anywhere that I can see. His big runup is recent, looks like.
All three of the POAGX guys' stints hit 15y end of this week.
Should also do a search of these names on MFO and MFOP.
https://mutualfundobserver.com/discuss/discussion/3176/thoughts-on-mid-cap-value-watch-list
Two of those five funds no longer have the same lead manager. NSEIX (hardly a surprise, longevity was a risk back then), and MSAIX (a fund that promptly dropped into the bottom half each year after my mention, except for its 47th percentile showing in 2018).
But the other three have had the same lead managers for 15+ years. They're all fine; I don't see FLPSX standing out. JAMCX https://connect.rightprospectus.com/JPMorgan/TADF/339128308/P?site=JPMorgan
ACMVX https://www.sec.gov/Archives/edgar/data/908186/000090818609000024/pea44-2009.htm
VETAX https://www.sec.gov/Archives/edgar/data/802716/000110465909013154/a09-4636_1485bpos.htm
These four alone constitute 4% of MCV funds according to M*. They can't all be the rare 3%
Yes, Tilllinghast's penchant for non-US equities, almost 38% as of a few months ago, has often been a drag, especially the last few years, and this has been much commented on. I wonder why FLPSX had less of a drawdown a year ago.
Miller's notable Victory Sycamore has the lowest 15y UI in MFOP, moreover, again probably in part because its mandate excludes foreign equities. A value fund triumph.
The debate over the persistence of fund manager performance greatly exceeds the persistence of their actual performance. Here is a paragraph that summaries the debate accurately:
“It’s no secret that investors often interpret past performance as evidence of manager skill and put their money to work accordingly. But risk-taking that paid off in the past may not continue to do so in the future. Luck—good or bad—may also influence past performance, but it’s fleeting. Many studies have analyzed the relationship between past and future performance and have generally found some evidence of performance persistence over short horizons. But there is less evidence that past performance can predict future performance over longer windows”.
This summary was lifted from the following Morningstar reference:
http://www.fwp.partners/wp-content/uploads/2016/09/Performance-Persistence-Morningstar-2016.pdf
Change happens all the time, especially in the marketplace. Luck is a major factor and that is transient. Thank you for your excellent submittals.
Best Wishes
Derf
Indeed luck is a major factor both on the upswing and the downswing of the markets as well.
It really could not be otherwise. Consider the huge disparity in overall experience and resources. For the most part you as an individual are competing against an organization whose main business is dedicated to studying, understanding, and investing in the marketplace. Just the intensity and magnitude of their commitment will overwhelm you. And there are many such organizations playing this game daily.
In general, many of these firms, certainly not all, will be winners, and the poor individual must be the relative loser in terms of underperforming them. To maintain an average, the winners and losers must balance each other in both the short and the long term. Such is the uncompromising math that dictates that averaging outcome.
That’s too, too bad for the average individual investor. The good news is that we are not all average, so hope is eternal.
Best Wishes
I would like to know each funds category. Sorting by how they have beaten their categories over the past 10 yrs, MWATX is on top (19.2%/yr), topping it’s category (roughly 13.2%/yr) by 6%/yr down to TWCIX (14.85%/yr) which beat its bogey by 0.17% /yr (a bogey of about 14.6%/yr).
I will say, I don’t think I own any of the funds, will have to chk. And I don’t think this list will change that. ;~))
https://www.morningstar.com/articles/321713/announcing-the-morningstar-fund-managers-of-the-decade
Bill Gross
Bruce Berkowitz
David Herro
2010
Things can change.
That is, if a fund performs poorly, there's a good chance that it's going to continue that way. Its bad luck, if it is luck, doesn't tend to change.
A quick search came up with this marketwatch column, and this UK paper: https://www.marketwatch.com/story/persistence-angle-adds-to-active-passive-fund-debate-2014-08-15https://www.pensions-institute.org/reports/performance_persistence.pdf
- I’ve never liked the “star manager“ approach to fund investing anyway. However, as humans we’re all (well most of us) attracted to that kind of “glitz” and larger-than-life celebrity status. I’ll include myself in the adoring crowd. And true-to-life, all hot hands eventually run their course. It’s been proven time and again.
- One can avoiid that issue somewhat by using good funds (D&C stands out) which utilize a team approach and generally shun having bright lights shining on individual managers.
- Perhaps overlooked in the OP is that value investing hasn't kept pace with the broader markets for a long time (decades I suspect). And value investing is an approach where good managers / management can contribute the most. Possibly value (as an investing style) will make a comeback and reward the die-hards who have stuck with it. Or possibly, the markets have undergone lasting structural changes (possibly related to technology) and value will never rebound.
- Obviously, if a manager who is taking a cut of the returns is to make sense for the investor, that manager needs to produce superior results to what the market averages can deliver.
- Missed in this discussion, I think, is that compared to the overarching sin of not investing enough early enough, the sin of owning funds that underperform somewhat would seem the less egregious over one’s lifetime. Also, the latter can be easily rectified along the way. The former cannot.