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Fund Spy

An Early Read on the 2014 Morningstar Alternatives Fund Manager of the Year

We are developing a pool of potential candidates.

Mentioned: , , , , , , , , ,

As part of the early handicapping for Morningstar's Fund Manager of the Year awards, we've run screens across the various categories (awards are given for domestic-stock, international-stock, fixed-income, allocation, and alternatives managers) to identify potential front-runners. Before turning to the alternatives group, I want to caution that these results are quite provisional; with two months remaining (when we ran the data) in what has been a very volatile year, it's quite possible that additional candidates could emerge or that someone on the current long list could experience a hard stumble.

Some additional caveats are in order when it comes to alternatives fund managers. For one thing, the list of Morningstar Medalists in alternatives categories (a baseline criterion to be considered for the FMOY award) is small, numbering only 24, which leaves us a limited initial candidate pool. Moreover, when considering the performance of alts managers, it's important to consider the role typically intended for alternatives within investor portfolios. Most alts funds are hedged relative to standard stock and bond indexes, and many advisors and investors view them as diversifying components of a portfolio. Thus, a simple screen based on funds' year-to-date returns and relative category ranking captures only part of the picture. We've extended our filters to examine Sharpe ratio, beta, and correlation.

Josh Charlson does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.