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Morningstar Announces 2012 U.S. Fund Manager Of The Year Award Winners

Stocks in this article: MORN

CHICAGO, Jan. 3, 2013 /PRNewswire/ -- Morningstar, Inc. (NASDAQ: MORN), a leading provider of independent investment research, today announced its 2012 U.S. Fund Manager of the Year award winners. The awards acknowledge managers who not only delivered impressive performance in 2012, but also excellent long-term risk-adjusted returns, and who have been good stewards of fund shareholders' capital. This year, Morningstar introduced new awards for two types of strategies—allocation and alternatives—in addition to domestic stock, international stock, and fixed income. To recognize outstanding fund managers each year, Morningstar selects leaders in each type of strategy. The 2012 Fund Manager of the Year award winners in the United States are:

Domestic-Stock Fund Manager of the Year:Bill Frels and Mark Henneman, Mairs & Power Growth (MPGFX)

International-Stock Fund Manager of the Year:Rajiv Jain, Virtus Foreign Opportunities (JVIAX) and Virtus Emerging Markets Opportunities (HEMZX)

Fixed-Income Fund Manager of the Year:Mark Kiesel, PIMCO Investment-Grade Corporate Bond (PIGIX)

Alternatives Fund Manager of the Year:The team of Eric Newman, Kevin Gates, Larry Eiben, Richard Gates, Chao Chen, and Yan Liu, TFS Market Neutral (TFSMX)

Allocation Fund Manager of the Year:David Giroux, T. Rowe Price Capital Appreciation (PRWCX)

"Despite a high level of economic and political uncertainty this past year, broad swaths of the market performed better than many investors would have expected, and each of our fund managers of the year have added value relative to their own benchmarks and broader peer groups, not just in 2012 but over the long haul," said Scott Burns, director of North American fund research for Morningstar. "We introduced awards for fund managers overseeing allocation and alternative strategies this year to recognize the growing investor interest in these areas. Interest in strategies using multiple asset classes has grown over the past 20 years, especially with the emergence of target-date funds and more flexible, go-anywhere funds pursuing a range of different goals. Assets in funds employing alternative strategies rose about 21 percent in 2011, and then another 16 percent through November 2012."

Domestic-Stock Fund Manager of the Year: Bill Frels and Mark Henneman, Mairs & Power Growth (MPGFX)At Mairs & Power Growth, Bill Frels and Mark Henneman have produced one of the best long-term records of any large-blend fund. Since Frels became co-manager in 1999, the fund has beaten all but one of its large-blend category peers and trounced the S&P 500 with an 8.2 percent annualized gain through year-end 2012.

"The managers follow an extremely patient approach—of the fund's top 25 holdings, 18 were bought in the 1990s and 17 of those have remained in the portfolio for at least 10 years," said Michael Herbst, director of active fund research for Morningstar. "The managers' success stems from a deep understanding of their holdings and their preference for companies that can increase earnings in difficult economic environments. While the basic materials and industrials sectors were two of the worst-performing sectors in 2012, the fund's holdings in those sectors boosted its returns, including paint and coatings firm Valspar, cleaning-products maker Ecolab, and chemicals firm H.B. Fuller."

The $2.5 billion fund has a Morningstar Analyst Rating™ of Silver, the company's second-highest Medalist rating, along with a Morningstar Rating™ of 5 stars for its past risk-adjusted performance. Among all the 2012 nominees for Domestic-Stock Fund Manager of the Year, Mairs & Power Growth offers the lowest fees with a 0.72 percent expense ratio.

International-Stock Fund Manager of the Year: Rajiv Jain, Virtus Foreign Opportunities (JVIAX) and Virtus Emerging Markets Opportunities (HEMZX)Rajiv Jain has managed Virtus Foreign Opportunities since 2002, and Virtus Emerging Markets Opportunities since 2006. He follows a high-conviction approach regardless of market trends and is willing to hold portfolios that look very different than the benchmark. The strategy has served him well—his funds have landed in the top decile of performance for most periods under his management. Through Dec. 31, 2012, the $1.3 billion JVIAX posted a 11.1 percent annualized return for the 10-year period while HEMZX, with $6.7 billion in assets, had a 17.4 percent annualized return for the same period.

"Jain's approach has produced attractive risk-adjusted returns over his tenure, especially compared with other emerging-markets funds. His relatively high exposure to Indian stocks worked well for the fund in both 2011 and 2012 despite a lagging Indian market in 2011," Herbst said. "He looks for companies with strong balance sheets, steady growth rates, and straightforward business models, with a heavy tilt to consumer-product companies, which have helped him weather market downturns."

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