Kris Jenner is quick to point out that you don’t have to be a doctor to successfully manage a mutual fund that invests in the medical industry.
“You don’t need a medical background,” says Jenner, who was trained as a surgeon and since 2000 has managed T. Rowe Price’s Healthcare Technology fund.
But from the looks of it, having an M.D. at the helm of a fund—and another on its analyst team—doesn’t hurt. Health Sciences boasts Lipper’s top scores for total return, consistent return and capital preservation, as well as low expenses.
Year to date, the fund—which invests in companies that research, develop, produce and distribute health-related products—has returned 18.49%, compared with 14.62% for its category, according to Lipper. It has comfortably beaten its category over one, three, five and 10 years.
“I think the fund has been successful because it’s navigated the risks it’s taken really well,” said Christopher Davis, senior fund analyst at Morningstar, Inc.
For both Jenner and G. Mark Bussard, a medical device analyst for Health Sciences, the fund’s high marks sum up successful second careers.
Jenner holds an M.D. from the Johns Hopkins University, School of Medicine, and he completed two years of a general surgery residency at the Johns Hopkins Hospital. In a sign of his earlier interest in investing, he has also managed a small hedge fund.
Bussard, meanwhile, earned his medical degree at the University of Virginia, where he was also a resident in general surgery. Prior to joining T. Rowe, Mark co-founded an early stage biotechnology firm that ultimately failed.
Both men found their way to T. Rowe after realizing that their dream career did not satisfy them.
“I was one of those people who was pre-med from age six,” said Bussard with a laugh. “I always thought I wanted to be a doctor, and I got there 20 years after making the decision, without really reevaluating it.”
As for Jenner, he says the investment world suits his competitive personality. “For whatever reason, when I went to the hospital in morning I did not believe I could be the greatest surgeon or doctor,” he said. “There was something missing; I just wasn’t excited.”
In his current job, trying to beat his peers—with performance numbers clearly showing the results—provides part of Jenner’s inspiration.
“I don’t think we’re the best in the world—yet,” he says. “But I have no specific reason as to why we can’t be.”
Clearly measurable outcomes also appeal to Bussard, who joined the fund in 2004. “In medicine, success can be really, really variable,” he explained. “It’s not clear what makes a good doctor—is he an expert in a certain technology? Does he have better outcomes? A nicer personality?”
In the mutual fund world, a fund’s team knows that outcomes and successes can be measured in absolute terms, he said.
In many ways, the men say, their medical backgrounds have translated smoothly to the business of investing. One advantage is a thorough understanding of the subject matter in which medical technology firms deal.
“If you’ve kind grown up in that (medical) environment, you more or less know that these people may sound incredibly sophisticated and knowledgeable,” said Jenner. “But you do know the limits of their knowledge.”
Morningstar’s Davis, however, argues that the healer aspect of a doctor’s personality might cloud his or her thinking as an investor.
“You could be really impressed by the gee-whiz technology and not necessarily think, ‘Is this company a good investment?’” he said.
Another advantage of having a medical background, said Jenner, is the ability to act without hesitation.
When he and Bussard were training as surgeons, they often had to intervene surgically—in life-or-death situations—without having all the information they’d like to.
In medicine, acting quickly can save lives, while in investing, it can mean better returns, explained Jenner. Both settings call for making decisions based on probable outcomes, not complete information.
“If we had perfect information, then the return potential would be diminished,” he said. “Everyone would know all the facts, not just us.”