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Week In Review


Morningstar Names Managers of the Decade

Basing the awards on superior risk-adjusted results and shareholder stewardship, Morningstar has named its Fund Managers of the Decade, bestowing the honors on PIMCO's Bill Gross, Fairholme's Bruce Berkowitz and Oakmark's David Herro, respectively, for fixed income, domestic equity and international equity.

Karen Dolan, director of mutual fund analysis for Morningstar, noted, "These managers got ahead by preserving capital on the downside and believing in their research when it pointed to good value."

Morningstar said Gross, manager of the $192 billion PIMCO Total Return, the largest mutual fund in existence, "made many prescient calls on interest rates, bond sectors and currencies, and nailed the housing bubble." The fund's 10-year annualized total return is 7.7%. By comparison, its peers returned an average of 5.5% a year over the past decade.

Berkowitz, manager of the Fairholme fund since its inception in 1999, has unrivaled stock-picking aptitude for companies with high free cash flow, Morningstar said. The fund earned a 13.2% 10-year annualized total return, beating the S&P 500 by 14 percentage points.

Herro, manager of Oakmark International Small Cap, which achieved a 10% annualized return for the past decade, successfully found "stocks trading well below their value," Dolan said. "His portfolios don't look anything like the benchmark and are often spiced up with a healthy dose of emerging markets exposure."

Supreme Court Seeks White House Input on Janus

After Janus appealed to the Supreme Court to dismiss a lawsuit against it for mutual fund market timing, the high court turned to the Obama administration for its input on the case, Janus Capital Group v. First Derivative Traders. A lower court reinstated the class-action lawsuit, originally filed in 2003. Janus said the lawsuit is flawed since it settled with federal and state regulations in 2004.

Finance Gains Jobs for First Time Since July 2007

As a further sign that the mutual fund industry and broader asset management business and economy are gaining strength, the financial industry netted 4,000 new jobs in December. This was the first time since July 2007 that there has been job creation, according to the Bureau of Labor Statistics. When real estate-related financial jobs are removed, the gains are even better: finance and insurance firms added 9,900 jobs. Jobs in finance now total 7,691,000, up from 7,691,000. In the summer of 2007, there were 8.3 million jobs in finance.

Fidelity VC Breaks Off

Fidelity Investments' venture capital unit has broken off from the fund giant to form an independent firm called Volition Capital. It will continue to manage its previous portfolio of 20 U.S. companies. Going forward, Volition will invest primarily in high-potential, founder-owned technology companies. Fidelity Managing Partners Larry Cheng, Andy Flaster, Roger Hurwitz and Rob Ketterson will continue with the new firm.

Fidelity closed Fidelity Equity Partners, a $500 million private equity firm, last June after only two years in existence.

MFA to Aim Hedge Fund Database at Washington

The Managed Funds Association is planning to create the largest database on hedge funds and use the information to lobby Washington. The database will amass each hedge fund's assets, number of investors, location and various strategies-but encrypt the information so each fund's information is anonymous.

"As the primary source of industry information for policymakers, the media and the public, it's important that we collect and aggregate data in a confidential and timely manner from as many managers as possible," said Richard Baker, president and chief executive officer of the MFA.

The MFA, which has 2,400 members, is partnering with PerTrac Financial Solutions to create the database, which if successful, will far surpass the dozen or so hedge fund databases already created that are limited by the fact hedge funds are not required to register with the Securities and Exchange Commission. PerTrac has already created one of those databases, which totals 22,000 funds from 5,300 advisors.

"We're looking to make a cosmos out of the chaos out there right now," said Meredith Jones, managing director with PerTrac.

Schwab Cuts Trading Fees

Charles Schwab is reducing its online equity trade commissions and add new products to gather customers and assets. Schwab retail investors will pay $8.95 per online trade in stocks or non-Schwab exchange traded funds. Schwab's proprietary ETFs feature commission-free online trading through Schwab accounts. Currently, investors with less than $1 million in household assets at Schwab or those that trade fewer than 120 times annually paid $12.95 per trade plus charges for trades larger than 1,000 shares.

The new simplified pricing is also available to Schwab Advisor Services' independent investment adviser clients who use Schwab's e-Delivery services to receive electronic statements and trade confirmations, and to all clients who trade equities in a Personal Choice Retirement Account, Company Retirement Account, or Plan Administrator Services account held at Schwab.