So long, U.S. Fund Manager of the Year Awards
! And hello, Awards for Investing Excellence!
team is rebooting their famous mutual fund awards with the biggest changes to the awards program in more than two decades.
| Laura Pavlenko Lutton|
North America Practice Leader, Manager Research Group
, North America practice leader for Morningstar's manager research group, talked to MFWire
about the changes, which involve a new brand, new categories, new eligible products, and a new announcement venue. Overall, the changes are part of an ongoinng effort to refocus the awards to be both long-term and forward-looking, while decreasing "the emphasis on a single calendar year of performance."
"I don't think that these new awards are an extreme departure from the way we've been evaluating managers," Lutton says. "It's very consistent with how we look at managers for our Analyst Ratings and research."
Still, the new program represents a departure from the old fund manager of the year awards, in several ways.
Not Just Mutual Funds
First, the awards will no longer exclusively recognize mutual fund PMs.
"We've expanded our coverage model to include SMAs, CITs, ETFs," Lutton says. "We want them to be managers that we know and that receive Morningstar Analyst Ratings."
Most Morningstar-rated SMAs and CITs tend to also be available in mutual fund format, Lutton notes. Yet, the investment research giant is expanding its coverage of SMA managers this year.
For 23 years, Morningstar analysts picked different fund managers of the year from different asset classes: first domestic stock, international stock, and fixed income (starting with the 1995 awards), then allocation and alternatives too (starring with the 2012 awards
), and even closed-end funds one time (the 1996 awards). Now they're returning to the early years of practice managers regardless of asset class.
Those old categories have been replaced with three new award categories: the Outstanding Portfolio Manager Award
, the Rising Talent Award
, and the Exemplary Stewardship Award
. Like the old manager of the year awards, the outstanding PM and rising talent awards are meant to recognize individual PMs or teams of PMs, but now they PMs will be competing with those running strategies in different asset classes, too.
"This new award gives us the flexibility to recognize a manager in any asset class," Lutton says.
One issue in the part, Lutton notes, is that in years when a particular asset class might be very out of favor, the winner in a particular category might still negative absolute performance (but positive alpha).
Strategies need to currently have a gold or silver Morningstar Analyst Rating to be eligible for the outstanding PM award. To be considered for the rising talent award, PMs need to be new (i.e. less than five years of PMing tenure), and their strategies have to be rated gold, silver or bronze or be featured in the Morningstar Prospects
Active AND Passive
Both active and passive strategies will be eligible for the new awards.
"This revamped set of awards gives us the opportunities to give those awards to passive strategies as well," Lutton says.
Firms Can Win Now, Too
Individual PMs, or teams of PMs, were the winners of Morningstar's old fund manager of the year awards. Yet one of the new award categories, the exemplary stewardship awards, will recognize firms, not individuals.
"This new award in the U.S. is an opportunity to highlight some of the firms that we think have done an excellent job," Lutton says.
In Line With the UK
Morningstar also has awards in more than two dozen other countries (plus the EU)
. And that played in to the change.
"We are bringing the U.S. awards in line with a program that we've had in place in the UK for many years," Lutton says.
However, the category names will be different on this side of the pond, Lutton notes, and there will be no U.S. quantitative fund awards (unlike in the UK and some other countries).
New Date, New Venue
Fundsters still have to wait a few months to see the first winners from the revamped Morningstar awards program, thanks to a new schedule.
In previous years, the Morningstar team revealed the nominations in January and then revealed
the winners weeks later, on CNBC's
"Power Lunch" program. This year, the winners will be recognized at the company's flagship Morningstar Investment Conference
in Chicago in early May, company spokeswoman Sarah Wirth confirms.
The Morningstar fund manager of the year program dates back
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