Managed Funds With Great Results
09/01/08 - 08:31 AM EDT
Stan Luxenberg
For many investors, Janus Twenty (JAVLX Quote - Cramer on JAVLX - Stock Picks) epitomized the 1990s bull market. During the five-year period that ended in 1999, Janus returned 45.22% annually, according to Morningstar. The media uniformly applauded the results, publishing glowing portraits of the fund's managers. Enthusiastic investors sent billions of dollars to Janus.
So how is Janus Twenty performing these days? For the five years ended in July, the fund returned 17.13% annually. That track record is compelling by historical standards, but the news media's response has been muted. A recent article in The Wall Street Journal struck a cautionary note about the dangers of investing in Janus funds, which have scored high returns by emphasizing energy stocks. The reaction to Janus Twenty is symptomatic of larger changes in attitudes. During the 1990s, the media and investors elevated portfolio managers to unrealistic heights. Investors came to believe that star managers were geniuses who could churn out profits every year. Now that the bear market has hurt most stocks, the pendulum has swung too far in the other direction. The press is running pessimistic articles. Grumbling that their portfolio managers are incompetent, shareholders are pulling billions of dollars out of funds with strong long-term records. Some of the greatest discontent has been directed at value managers, who have suffered big losses because of trouble in financial shares. One-time stars who now get little respect include Bill Nygren of Oakmark Select (OAKLX Quote - Cramer on OAKLX - Stock Picks), Ron Muhlenkamp of Muhlenkamp Fund (MUHLX Quote - Cramer on MUHLX - Stock Picks) and Wally Weitz of Weitz Value (WVALX Quote - Cramer on WVALX - Stock Picks). To appreciate how irrational investors have become, consider Weitz Value. During the past 15 years, the fund has returned 10.6% annually, outdoing 90% of large value funds and surpassing the S&P 500 by more than a percentage point annually. In seven of the last ten years, Weitz outdid the S&P.
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