The Leading Information Source for Financial Advisers THESE UP-AND-COMING MUTUAL FUND MANAGERS ARE PASSIONATE ABOUT THEIR WORK, AND OUTSHINING THE COMPETITION BY JOHN WAGGONER RISING STARS Y OU’VE PROBABLY heard of most of today’s best mutual fund managers:Will Danoff, the manager of Fidelity Contrafund, Dan Fuss of Loomis Say- les Bond, David Herro, the manager of Oakmark International.The problem is, so has everyone else.Who are today’s up-and-coming star managers, and how did they get there? Here are five managers you should keep your eye on. We’ve selected them based on their age, performance and recommendations from other fund watchers, such as Morningstar Inc.’s Russel Kinnel and Jim Lowell, editor of Fidelity Investor.The specific criteria were relatively simple: A three-year record that beats their category average, tenure of less than five years at the helm of their funds, and younger than 50. (Contrary to popular myth, few funds are run by 20-somethings: 35 is considered a whippersnapper in the mutual fund world, and 40 is still young to have charge of a fund.) We’ve also gone out of our way to identify bond managers as well as stock managers, since most clients need good managers on the bond side as well as the stock side. Our five managers include one multi-cap domestic stock manager, one small-cap manager, an international fund manager, a high-yield bond manager and an emerging markets manager. What do they have in common? Hard work is one touchstone, as is a thirst for learning, and an appreciation of history. “Because I was young, all I could do is outwork and outstudy everyone else,”said Samy Muaddi, portfolio manager for theT. Rowe Price Emerging Markets Corporate Bond Fund.“You need to study history in granular detail to see what creates value in the business world,”said Arvind Navaratnam, manager of the Fidelity Event-Driven Opportunities Fund. The other touchstone: a passion for their field. “Find something you love,”said Bryan Krug, manager of Artisan High Income.“If you love it, you’ll succeed. ” Here, then, are our five managers who are not only doing what they love, but excelling at it.
AMY Y. ZHANG Alger Small Cap Focus Fund (AOFAX) AGE: 47 THREE-YEAR RECORD: 11.55% vs. 8.10% for the average category return ASSETS: $789.9 million Education: B.A. from Manhattan- ville College, MBA from Colum- bia Business School. How did you get your current job? “I had been a small-company stock manager at Brown Capital
growth. And we focus a lot on the downside risks: We want high growth and high quality.” What advice would you give to future fund managers? “Be an avid reader,”
in Baltimore when Alger approached me,” Ms. Zhang said.“It was a great opportunity to build a small-com- pany stock fund from scratch. It’s very excit-
boy: John Malone and the Rise of the Modern Cable Business,” by Mark Robichaux.“I appreci- ate a lot of [Malone’s] thought processes, and I love learn- ing from exceptional business leaders. My favorite books are biographies or autobiographies of successful people.” What do you do when you’re not managing the fund? “I started taking piano lessons about 10 years ago,”Ms. Zhang said. “I love to travel. And I have a young child, so we just came back from a Disney Star Wars cruise. And I mentor a lot of young business students.”
ing for me to plant new seeds and see them blossom.”[The fund launched in March 2008.] How do you manage the fund? “We define ‘small’ in terms of revenue, not market capitaliza- tion, and we look for revenue to double in three to five years. We let our winners run, so we don’t sell when a stock reaches a certain market capitalization. We hold fewer than 50 stocks, and look for sustainable topline
Ms. Zhang said.“The world is changing, especially for small- cap companies, so you have to be curious. Intellectual curiosity is one of the most important quali- ties for a fund manager. And you have to have an open mind and be humble, because this can be a very humbling business.You have to be willing to stop and think, ‘What if we’re wrong?’ Last book read: “The Cable Cow-
This article reprint, originally published by InvestmentNews on April 9, 2018, is considered sales literature for the Alger funds mentioned only and not for any other products shown. Please note that InvestmentNews is an independent publi- cation and the performance and ratings cited in the article do not represent the experience of any individual investor. For the period ending March 31, 2018, the Alger Small Cap Focus Fund (the “Fund”) returned the following: Average Annual Total Returns (%) (as of 3/31/18) QTR YTD 1 Year 3 Years 5 Years 10 Years Since Inception Class A (Incepted 3/3/08) Without Sales Charge 7.40 7.40 27.56 12.37 13.81 10.13 9.92 With Sales Charge 1.77 1.77 20.84 10.36 12.58 9.54 9.34 Russell 2000 Growth Index 2.30 2.30 18.63 8.77 12.90 10.95 (Since 3/3/2008) 10.83 Morningstar Percentile Rank (Small Growth) Based on Total Returns Class A — — 10% 72/684 12% 60/592 19% 88/531 53% 223/402 —
Fred Alger Management, Inc. (“FAM”) has contractually agreed to reimburse Fund expenses (excluding interest, taxes, brokerage, and extraordinary expenses) through February 28, 2019 to the extent necessary to limit the total annual Fund operating expenses of the Class A to 1.20% of the class’ average daily net assets. This expense reimbursement may only be amended or terminated prior to its expiration date by agreement between FAM and the Fund’s Board of Trustees, and will terminate automatically in the event of termination of Investment Advisory Agreement. FAMmay, during the 1-year term of the expense reimbursement contract (“ERC”), recoup any expenses waived or reimbursed pursuant to the ERC to the extent that such recoupment would not cause the expense ratio to exceed the lesser of the stated limitation in effect at the time of (i)
the waiver or reimbursement and (ii) the recoupment. Only periods greater than 12 months are annualized.