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'New' star fund managers
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August 26, 1999: 11:40 a.m. ET
Not household names. They don't do commercials. But funds do have stars
By Staff Writer Martine Costello
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NEW YORK (CNNfn) - Fund manager Bill Nygren has never signed an autograph, and nobody has ever recognized him at a restaurant.
And unlike legendary managers Peter Lynch and Michael Price, Nygren hasn't been on the covers of business magazines or featured in splashy TV ads.
But Nygren e-mails at least two or three shareholders every day, and he goes to investing conferences to talk about his fund group, Oakmark Family of Funds.
"I think fund companies figured out after Peter Lynch and Michael Price retired that there's a downside to creating star managers," said Nygren, manager of the Oakmark Select Fund. "It needs to be about the firm, not about managers."
Being a star manager isn't what it used to be. After the departure of a string of high-profile managers in the 1990s, fund companies more and more are emphasizing the "team" approach.
Probably the only true "star" manager left is Robert Stansky, who heads Fidelity's titanic Magellan Fund. But when was the last time you saw Stansky in a TV ad? Fidelity is the first to say the low-profile star isn't doing press interviews.
But there are still a lot of people, like Nygren, who are getting noticed at the helm of funds, according to industry experts. If Lynch is Tom Cruise, then Nygren would be more like Harvey Keitel.
"These are not marquee-name stars," said Bill Dougherty, an analyst at the Boston firm Kanon Bloch Carre. "These are hidden stars."
Who the stars are
Some of the new stars are heading funds in sectors that have turned around. Others have been around for years, easily recognizable on Wall Street but perhaps not on Main Street.
For example, there's Bill Miller, head of the Legg Mason Value Trust, which is the only general equity fund to beat the S&P 500 for the last eight years, according to fund-tracker Morningstar. Miller has developed almost a cult following, said Scott Cooley, an analyst at Morningstar.
Another name on the star list is Wally Weitz, manager of the Weitz Partners Value Fund and the Weitz Value Fund, Cooley said.
"Probably most people don't know who he (Weitz) is, but he has a fantastic record and a dedicated following," Cooley said.
And of course, Internet fund managers are creating their own buzz. Ryan Jacob, the former head of the Internet Fund who is starting a new Internet fund, Jacob Internet Fund, has his own fan club.
What is the biggest difference? The evolution of new stars has more to do with performance than their personalities, Cooley said.
Dougherty thinks it is based also on cyclical changes, when a new sector of the market comes into favor.
Dougherty would put Mark Holowesko, manager of the Templeton Foreign Fund and Templeton Growth Fund, and Chuck Freeman, manager of the Vanguard Windsor Fund, in the category of asset-class stars. Both emerging markets funds and value funds have been performing well in 1999.
"The stars emerge as asset classes do well," Dougherty said. "A star isn't a star just because he's a genius. It's the style he's investing in."
Nygren, of Oakmark funds, said the only danger is that a familiar name will make investors even more likely to chase the latest hot fund and move their money around too often.
"The risk is you look to see who the potential hot manager is in the last month," Nygren said. "It encourages a backward-looking, rather than a forward-looking, mentality."
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