Morningstar of Chicago announced the results of a study today that shows experienced mutual fund managers have fared better during the recent bear market than their less experienced counterparts.
The study, which covers the period from the end of March 2000 to the end of March 2001, looks at the performance of funds with at least $100 million in assets. During the 12-month period covered, the Nasdaq fell nearly 60 percent, the S&P 500 dropped almost 22 percent, and most domestic stock funds lost money, according to Morningstar. The study shows, however, that funds with management teams that had tenures of four or more years lost less money, on average, than the typical domestic stock fund. The more experienced the managers, the less funds lost relative to the S&P 500 and the typical domestic stock fund. While funds managed by both the less experienced and more experienced stock pickers lost less than the S&P 500 on average, funds managed by less experienced managers lost more than the average domestic stock fund, according to Morningstar. 'Though a resurgence in value funds during this 12-month time period helped experienced managers look good because many tenured fund managers lean toward the value end of the spectrum, funds with seasoned hands tended to do well in all respective categories,' said Daniel Culloton, managing editor of the Morningstar news team. 'There's evidence that veterans of both value and growth investing camps added an advantage. However, no two bear markets are the same, so it's hard to tell how the funds that have held up well during this rough spot will fare the next time.'