Manager Named Top Alternative Asset Manager
Each year, Morningstar recognizes the top fund managers in the following categories: Domestic Stocks, International Stocks, Fixed-Income, Allocation, and Alternative. For 2015, James Troyer, Michael Roach, and James Stetler of the Vanguard Market Neutral Fund (VMNIX) were recognized as the best managers in the Alternative fund category, beating out the managers of the Boston Partners Long/Short Research Fund(BPIRX) and the John Hancock Global Absolute Return Strategies (JHAIX).
According to Morningstar, VMNIX deserved the award because it “produced what investors want from alternative strategies: very low correlation, solid returns when equity markets go south, and, on top of that, the lowest fees of any alternatives fund.”
VMNIX returned +5.52% in 2015, which beat the category average by a whopping 577 basis points, but still only ranked in the top 12% of funds in its category, proving Morningstar considers more than just returns in doling out awards. VMNIX did outgain the other nominees BPIRX and JHAIX, which returned +1.52% and +1.73%, respectively, but JHAIX did outdo Morningstar’s winner on a relative basis, ranking in the top 7% of the site’s GY category.
Morningstar’s John Hale especially appreciated how the fund performed during the volatile third quarter, “when it mattered most” to investors: VMNIX gained 7.0%, while the S&P 500 lost 6.4%. Beyond simply protecting shareholders against losses, Messrs. Troyer, Roach, and Stetler generated serious alpha during the tumultuous period. All three men are members of Vanguard’s quantitative-equity group, and Troyer has headed the fund since 2007. The trio was nominated in the same category in 2014.
A potential downside for some investors: VMNIX’s initial investment is quite steep at $250,000. According to Morningstar, Vanguard wants to keep investors from “misusing” the fund. The good news: a 0.25% net-expense ratio, even for the retail shares.