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(Adds that Sequoia fund has benefitted by outperforming its peers in down markets.)



) --


nomination of five fund-management teams for its annual award comes just in time for investors torn between leaving the equity markets or preparing for what may be a rally next year.

As the

S&P 500 Index

struggles to close out 2011 with a gain -- it's down 1.1% -- the best performer among the group has reaped a return of 11.8%, about 50% higher than the historical average. That would be the

Sequoia Fund

(SEQUX) - Get Free Report

, last year's winner.

"We look for managers who have had a great year and earned strong long-term results for shareholders," Morningstar said in explaining its vetting process. "They also have to be strong stewards who put fund-holders first."

It's been a difficult year for the mutual fund industry, as investors have drained $74.5 billion from domestic equity stock funds, less than 1% shy of the outflows in all of 2010. They shifted into cheaper exchange traded funds, or the relative safety of bond or money market funds, despite their low returns. But last year's Morningstar nominees have been winners, proving that experienced stock pickers can still make money.

Also on the list again this year, along with Sequoia, is the

Artisan Mid-Cap Fund

(ARTMX) - Get Free Report

, managed by Andy Stephens and James Hamel. Its performance this year, a 1.9% loss, puts it in the top 29% of the 9,810 mid-cap growth funds.

The other four funds from last year have met with decidedly mixed results.

For example, the

Fairholme Fund

(FAIRX) - Get Free Report

, managed by Bruce Berkowitz and Charles Fernandez (who has since left), is down 31% this year, a performance that puts it at the bottom of its category, after betting heavily on a financial-industry rebound.

The Fairholme fund has seen its asset base tumble 55% this year, to $8.9 billion, due to its year-to-date loss and huge shareholder redemptions.

Berkowitz was selected manager of the year for 2009 by Morningstar and manager of the decade for the period ending 2010, a time when his fund had a 13% annualized return.

Also nominated last year was the

Meridian Growth Fund

(MERDX) - Get Free Report

, managed by Richard Aster Jr. and William Tao. It is up 0.9% this year, placing in the top 20% of fund peers. The remaining nominee from last year, the

Allianz NJ Small Cap Value


, run by Paul Magnuson and Ben Fischer, is up 0.3%, a top 5% performer.

The 2011 fund manager of the year nominees and a synopsis of their funds, including the top holdings, follows:

Sequoia Fund

(SEQUX) - Get Free Report


Robert Goldfarb and David Poppe. They were 2010's Manager of the Year.


$4.7 billion


up 11.8% this year, which puts it in the top 1% of 11,200 large-blend funds in terms of performance; three-year average annual return of 16%. Morningstar says to "look out over the trailing five-, 10- and 15-year periods and this fund is in the top 5% of large-blend (funds) and at least 300 basis points per annum ahead of the S&P 500."

Despite maintaining a concentrated portfolio of only 34 stocks, Sequoia "has done its best work, relatively speaking, in bear markets," Morningstar said, as it did during the sell-off in 2011's third quarter. "This has owed to the fund's high-quality portfolio, but also to its occasionally large cash stakes."

Top Picks:

Valeant Pharmaceuticals


, 10% of the fund, up 61%;

Berkshire Hathaway

(BRK.B) - Get Free Report

, 8.5% of fund, down 5.3%;

TJX Cos.

(TJX) - Get Free Report

, 7% of fund; up 44%.

Oakmark Select

(OAKLX) - Get Free Report


Oakmark I

(OAKMX) - Get Free Report


Bill Nygren, who won the award in 2001. Morningstar says he "continues to be an adept stock picker" and his funds have outperformed in up and down markets, though mostly by losing less in down markets."


Oakmark Select, $2.5 billion; Oakmark I, $5 billion.


Select, up 0.43% with a three-year average annual return of 20.6%; Oakmark I, up 0.43%, three years: 18.3%.

Top Picks:


Discovery Communications

(DISCA) - Get Free Report

9% of fund, down 3%;

Liberty Interactive


6%, up 1.4%;


(MA) - Get Free Report

, 4.9%, up 67%. Oakmark I:



, 2.4% of the fund, up 13.8%;


(INTC) - Get Free Report

2.4%, up 17%;

Bristol-Myers Squibb

(BMY) - Get Free Report

, 2.4%, up 37%.


(YACKX) - Get Free Report


Yacktman Focused

(YAFFX) - Get Free Report


Donald Yacktman and Stephen Yacktman


Yacktman, $6 billion; Yacktman Focused, $4 billion.


Yacktman, up 5.6%, three-year average annual return of 25%; Yacktman Focused, up 5.8%; three-year average annual return, 25%. The Yacktman fund is in the top 1% of its category for the past three-, 10-, and 15-year periods. Morningstar said that "while Yacktman does have a blemish from market-timing, the funds have certainly made it up to shareholders who stuck with them."

Top Picks:

Yacktman, Yacktman Focused:


(PEP) - Get Free Report

, 11.7% of fund, up 3.4%;

News Corp.

(NWSA) - Get Free Report

, 11.4%, up 19%;

Procter & Gamble

(PG) - Get Free Report

, 10%, up 5.5%.

Artisan Small-Cap Value



Artisan Mid-Cap Value

(ARTQX) - Get Free Report


Artisan Value

(ARTLX) - Get Free Report


Scott Satterwhite, James Kieffer and George Sertl. Morningstar says the fund is noted for its consistency. Its managers "look for stocks trading at steep discounts to their private-market values."


Artisan Mid-Cap Value, $7 billion; Artisan Small-Cap Value, $3 billion; Artisan Value, $550 million.


Artisan Mid-Cap Value, up 5%, three-year average annual return gain 20%; Artisan Small-Cap Value Artisan Value, down 3.5%; three-year average, gain of 18%; Artisan Value, up 4.6%, three-year average return of 17%.

Top Picks:

Mid-Cap Value:


(CI) - Get Free Report

up 15%;


(KR) - Get Free Report

, up 9%;

Towers Watson

(TW) - Get Free Report

, up 15%. Small-Cap Value:


(RCII) - Get Free Report

, up 16%,

FTI Consulting

(FCN) - Get Free Report

, up 15%,

H.B. Fuller

(FUL) - Get Free Report

, up 16%; Value:


(AAPL) - Get Free Report

, up 23%,

Wal-Mart Stores

(WMT) - Get Free Report

, up 12%.

FMI Large Cap

(FMIHX) - Get Free Report


FMI Common Stock

(FMIMX) - Get Free Report


A large team lead by Patrick English and Ted Kellner. Morningstar says "management looks for companies with strong returns on invested capital where shares are trading at modest levels on metrics like (price-to-earnings ratio) and price/cash flow."


FMI Large Cap: $4.5 billion; FMI Common Stock, $1 billion.


FMI Large Cap: up 0.5%, three-year average annual return of 14%; FMI Common Stock: up 3%, three-year average nnual return of 20%.

Top Picks:

Large Cap:

Nestle (NSRGY) - Get Free Report

, down 0.4%;


(SYY) - Get Free Report

, up 2.4%;

Wal-Mart Stores

(WMT) - Get Free Report

, up 12%; FMI Common Stock:

Arrow Electronics

(ARW) - Get Free Report

, up 4%,

Arthur Gallagher


, up 17%,

W.R. Berkley

(WRB) - Get Free Report

, up 24%.

Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.