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Friday, April 10, 2015

The Stock Funds Have No Heroes

News summary by MFWire's editors

If you're feeling a little nostalgic for the good old days of star stock pickers, or pondering the disappearance of those stars, take a look at Bloomberg today.

Charles Stein of Bloomberg highlights the lack of any real heirs to the legendary equity fund PMs of old, like Peter Lynch and Bill Miller. The article contrasts the lower profile of current top-performing stock fund PMs with the higher profile of old stock fund PM stars or of current star bond fund PMs like Bill Gross (now Janus [profile]), Jeffrey Gundlach (DoubleLine [profile]), or star hedge fundsters like Carl Icahn and William Ackman.

Part of the story, as Bloomberg notes, is the net outflows (partly thanks to performance woes) from active stock funds over the past few years ($231 billion in the six-year post-financial crisis bull market, compared to $1.1 trillion net flowing into passive stock funds and ETFs and $1.2 trillion flowing in active and passive bond funds and ETFs). And part of the story reflects fundsters' differing strategies: prominent stock pickers like Dodge & Cox [profile], Primecap, and Sequoia-powering Ruane Cunniff & Goldfarb [profile] (or Capital Group's [profile] American Funds, unmentioned in the article) rely on analyst and PM teams, what Bloomberg calls "the antithesis of the star system." Having a team instead of a single star means less spotlight, both when things are good (so fewer interviews) and when things are bad (when someone leaves).

"There are still some fantastic managers out there," Dan Kern, president of Walnut Creek, California-based Advisor Partners, tells Bloomberg. "They are just not people who are going to jump on the couch and throw their arms in the air."

Gundlach himself also posits that bond fund PMs make better gurus for TV and other media outlets.

"The bond guys tend to talk about macro issues, which are of interest to a broader audience," Gundlach tells Bloomberg. "How many times can you hear a stock manager say he likes Apple?"

"Today, you couldn't find anyone to put on the cover of a magazine," Lawrence Glazer, managing partner of Boston-based Mayflower Advisors, tells Bloomberg. "The stock funds have no heroes."

The article mentions several former stars, including Ken Heebner of CGM [profile] and Bruce Berkowitz of Fairholme [profile], as well as Legg Mason's [profile] Miller and Lynch.

On the flip side, Bloomberg also points out some of the current, often under-the-radar, elite stock picking fundsters: Henry Ellenbogen of T. Rowe Price [profile], William Nolin of Principal [profile], William Smead of Smead Capital [profile], David Herro and Bill Nygren of Harris Associates [profile], Will Danoff of Fidelity [profile], James Miles and David Green of Hotchkis & Wiley [profile]. 

Edited by: Neil Anderson, Managing Editor


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