BOSTON (MarketWatch) — Investors are likely to see Morningstar Inc.’s “Fund Manager of the Year” awards like a Good Housekeeping Seal of Approval. Instead, they should think about it like an actor winning the Oscars or a team or superstar player landing on the cover of Sports Illustrated.
There have been plenty of Oscar winners whose next effort was an overblown flop, and Sports Illustrated has long had an aura of “cover jinx,” where bad things happen to the player or squad that gets the ink.
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Keep that in mind when considering the award-winners announced by Chicago-based Morningstar /zigman2/quotes/209325896/composite MORN +1.81% on Wednesday. Domestic-Stock Fund Manager of the Year went to Scott Satterwhite, James Kieffer and George Sertl, the team behind Artisan Mid Cap Value /zigman2/quotes/203177152/realtime ARTOX -0.60% , Artisan Value /zigman2/quotes/208860727/realtime ARTLX -0.86% and Artisan Small Cap Value . International-Stock Manager of the Year was claimed by the team at Tweedy Browne Global Value /zigman2/quotes/205809022/realtime TBGVX -0.67% , with John Carlson of Fidelity New Markets Income /zigman2/quotes/208479643/realtime FNMIX -0.50% earning Fixed-Income Manager of the Year honors.
The winners all had superior results in 2011, but it’s a new year.
Consider that of the winners in 2010, the Sequoia Fund /zigman2/quotes/209100218/realtime SEQUX -0.90% topped the charts in 2011, while Janus Overseas /zigman2/quotes/203605506/realtime JAOSX -0.93% lost 33% to finish in the bottom 2% of its peer group, with Templeton Global Bond /zigman2/quotes/202335792/realtime TPINX -0.37% in the bottom 5% of its peer group.
In fact, looking out over the last three years, managers seemed to have a rough time running money while admiring their trophies. Three of the funds finished in the bottom 10% of their peer group in the year after their triumph, another was in the bottom quartile of its category, and two more were below-average.
Bruce Berkowitz of the Fairholme Fund /zigman2/quotes/200889155/realtime FAIRX -1.08% won the award in 2009 and was the exception to the year-after pain, finishing at the very top of his peer group in 2010. Alas, he finished in the 99th percentile of that same group in 2011. That should at least make investors wonder whether Bob Goldfarb and David Poppe of Sequoia might be next.
It’s not much better if you look at the managers and give them more time. For Morningstar’s Fund Managers of the Year in 2008, two are in the bottom-third of their peer group over the three years since. Even the one 2008 winner with superior results since then — Artisan International Value /zigman2/quotes/207322356/realtime ARTKX -0.55% run by David Samra and Daniel O’Keefe — stumbled through two years of disappointing results before a strong rebound in 2011 cleaned up those two years of lagging. Go further back to 2007 and a legend like PIMCO’s Bill Gross has been below-average in his peer groups over the last three years.
The moral of the story is clear. Mutual fund managers are a bit like those Oscar-winning actors or the star athletes; while trophies and championships are nice, the performance that matters most to their fans is the one that happens next.