Two factors contribute to why less-aggressive equity funds have longer manager tenure: maturity and trend-shunning. "As managers get older, they often get more careful and deliberate in their processes," Culloton says. "Plus, in the late 1990s, a tremendous amount of new growth funds were introduced at the height of the bull market." Even though many of those funds have since folded or consolidated, the universe is still somewhat skewed towards an abundance of young growth funds.
Don't Be Ageist
The shining examples of manager tenure would hardly surprise most fund investors. Dodge & Cox's
(DODBX Quote - Cramer on DODBX - Stock Picks)Balanced and
(DODGX Quote - Cramer on DODGX - Stock Picks)Stock funds;
(ACRNX Quote - Cramer on ACRNX - Stock Picks)Liberty Acorn fund and Mairs & Powers
(MPGFX Quote - Cramer on MPGFX - Stock Picks)Growth fund all have stellar records and significantly experienced stock pickers.
The management team behind the Dodge & Cox funds has an average tenure of 36 years; Acorn's Ralph Wanger has managed the fund for 30 years; and George Mairs has been at the helm for 22 years. In addition, William Ruane has managed the Sequoia fund for 32 years, consistently beating the market in all but the most bullish of years.
Despite their longevity and success, though, some stalwart funds -- like Fidelity's
(FMAGX Quote - Cramer on FMAGX - Stock Picks)Magellan -- were notable omissions from the 20-year club, since their current managers are fairly new. (Magellan manager Robert Stansky took over the fund in 1996.)
Other favorite funds that have done better than average both in the bear market and over time, but just missed the 20-year manager mark are
(WPVLX Quote - Cramer on WPVLX - Stock Picks)Weitz Partners Value fund and the
(CFIM Quote - Cramer on CFIM - Stock Picks)Clipper fund. Wally Weitz and Clipper managers James Gipson and Michael Sandler have been managing their funds for 18 to 19 years.
Not all of the members of the winning 20-year club steer conservative funds -- and not all beat shorter-tenured managers during the bear market. The notoriously volatile
(LOMCX Quote - Cramer on LOMCX - Stock Picks)CGM Capital Development and
(LOMMX Quote - Cramer on LOMMX - Stock Picks)CGM Mutual funds, headed by Ken Heebner, are the most notable exceptions. Despite racking up impressive gains at many points in his career, Heebner's concentrated funds failed to beat the majority of their category peers during the bear market. (Then again, because of their sector and geographic bets, these funds are almost impossible to categorize.)
So while age should come before beauty, manager tenure clearly should not be your sole reason in choosing a fund. The fund's style is of primary importance, with expenses running a close second. But if everything else seems equal, consider how long a manager has been doing his or her job -- at this fund or a similar one -- and don't hesitate to show some deference to the elders.
Beverly Goodman
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