8/8/2011 1:51 PM ET|
Young guns to trust with your money
While relatively new to money management, these managers are among the top performers in their respective mutual fund categories.
What if you had spotted the investing prowess of a Warren Buffett 50 years ago? It's easy to single out one of the world's greatest investors when they've been trouncing the markets year after year -- and then decade after decade. It's far trickier to identify the next generation of great investors. Yet if you staked all your chips on money managers late in their career, you'd miss out on decades of super returns.
The average age of the hotshots profiled here is 39 -- and their average tenure running a fund is just over six years -- but all told, they manage $200 billion in their flagship funds and other portfolios.
All have landed in the top 5% of their Morningstar fund categories in recent years.
Naturally, when one bets on money managers with fewer gray hairs, it's all the more difficult to predict how they'll perform in an ever-changing investment climate. But one way to improve the odds, says Russel Kinnel, Morningstar's director of mutual fund research, is to find those who have come up through the ranks at venerable fund companies and learned from the best.
For prime examples, consider Wendy Trevisani and Lei Wang, who co-manage the Thornburg International Value (TGVIX) fund with the 71-year-old William Fries, one of the all-time notable stock pickers. Or consider Michael Hasenstab, who sharpened his bond-investing skills at well-regarded Franklin Templeton. Hasenstab has been making billion-dollar bets on a near-weekly basis for years -- and, ahem, he's only 38. Now that would seem to be the foundation for a great investing legacy.
Templeton Global Bond (TPINX)
After a stint as a high school exchange student in Beijing in 1991, Michael Hasenstab headed east again in 1998 to get a Ph.D. in economics in Australia -- just as a currency crisis was roiling much of Asia. His dissertation topic: the development of China's financial markets. Although economies in the region were crumbling at the time, he saw their potential. Fast-forward 13 years, and we find the fixed-income manager worried about European sovereign debt and ultralow interest rates in Japan.
Although emerging-market bonds have been on a tear, he thinks they are still undervalued in fast-growing economies like those of China and South Korea. He particularly likes Australia, the nation his mother hails from. He expects the Australian dollar, which early this spring surpassed the U.S. dollar, to keep climbing, because of relatively low government debt, high interest rates and strong commodity exports. "It isn't just rising because the U.S. dollar is falling," he says. "This is genuine currency appreciation."
Hasenstab began co-managing the Templeton Global Bond fund a decade ago and took over as sole manager in 2006. The $52.1 billion fund has been in the top 1% of world bond funds during his tenure, with average annual returns above 12%.
Not all his calls have been quite so prescient. Notably, he decided to short the Japanese yen last year, only to see it rally against the dollar. (He continues to believe that the yen will weaken over time. "Japan can't lower interest rates any more," he says, "so they will have to print more money.")
Hasenstab, meanwhile, sold the last of his Treasury bonds five years ago and has trimmed his exposure to Europe. He's now focusing only on countries with low government debt and robust exports, such as Norway and Poland.
Wendy Trevisani and Lei Wang
Thornburg International Value (TGVAX)
Wendy Trevisani and Lei Wang like to think of themselves as "global generalists." That's what attracted them to Thornburg Investment Management, a quirky Santa Fe, N.M., fund company. As co-managers of the $28.7 billion Thornburg International Value fund, they have the freedom to look anywhere on earth for a promising investment -- whether it's a Danish drugmaker or a Chinese oil driller.
Trevisani and Wang, who both recently turned 40, began at Thornburg as summer interns. William Fries, the firm's legendary value investor, was so impressed with their "curious, open minds" that he lured them back after they got their M.B.A.s. They have co-managed the international fund with Fries for the past five years -- when the portfolio returned more than 5.5% a year on average, putting it among the top 3% of foreign large-cap funds.
Wang -- who goes by the nickname "Rocky," because the Chinese character for his name is a picture of three stones -- grew up in Shanghai. He has introduced a number of Chinese stocks to the portfolio, including Hong Kong Exchanges & Clearing (HKXCY, news) and China National Offshore Oil Corp. (CEO, news) essentially the Exxon Mobil (XOM, news) of China.
Trevisani was the only member of her family not to pursue a medical career, so it is perhaps fitting that she digs deep into health care stocks. It was she who discovered one of the portfolio's largest holdings, Novo Nordisk (NVO, news) which makes drugs to treat diabetes, a disease that is growing rapidly around the world.
That's not to say they haven't tripped up along the way; both managers have held on to stocks long after they started to swoon. Trevisani says the fund owned Nokia (NOK, news) the Finnish cellphone maker, while the share price dropped 65% from its peak. Wang clung to a Chinese property developer, Country Garden, during the financial crisis, when buyers were walking away from its properties.
In general, the pair take a flexible approach to value investing. Says Trevisani, "We're willing to pay up for premium companies."
VIDEO ON MSN MONEY
Hilarious. All the performance numbers for these funds are down for the day. Four out of five are down a greater percentage than the S&P 500 index. Is this the comedy channel?
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