Markets & Finance

Funds: Talking Tenure


S&P finds mutual funds with very seasoned managers

From Standard & Poor's weekly investing newsletter, The Outlook

Let's say you are reviewing a list of similar, actively managed mutual funds to choose one for your portfolio. They have similar long-term performance stats, but the lead manager for one recently left the fund, while another has had the same lead manager for years. You've heard the advice that past performance is not a good indicator of future returns, but how exactly might you apply that counsel in this instance?

"Based on several studies, manager tenure is among the few characteristics that has demonstrated a relationship to consistently strong performance," says Katherine Gallagher, a portfolio officer for Standard & Poor's Investment Advisory Services. "We consider a manager's relevant experience to evaluate his/her track record in various market conditions."

Rosanne Pane, a mutual fund strategist and a member of the S&P Investment Policy Committee, agrees manager tenure is important in analyzing mutual funds. "Long-tenured fund managers have experienced both bull and bear markets and understand how to maneuver their portfolios through different market cycles," she says.

Here's a select list of no-load domestic equity funds, open to new investors, with an S&P Mutual Fund ranking of 5 STARS (placing the fund in the top 10% of its peer group in the previous three years) or 4 STARS (the next 20%), where the manager tenure is more than 10 years.

Ask your financial adviser if any of these funds may be right for your portfolio.

American Century Growth (TWCGX): 4 STARS

American Century Vista (TWCVX): 5 STARS

Berkshire Focus (BFOCX): 4 STARS

Brandywine (BRWIX): 4 STARS

Brandywine Blue (BLUEX): 5 STARS

CGM Focus (CGMFX): 5 STARS

Prudent Bear (BEARX): 5 STARS

T. Rowe Price New Era (PRNEX): 4 STARS

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Piskora is managing editor of U.S. Editorial Operations for Standard Poor's .

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