Retiring fund manager Ed Owens offers key lessons
That name probably doesn’t ring a bell, which tells you something about how investors focus on the wrong people and the wrong lessons. Owens — the longtime manager of Vanguard Health Care Fund — is arguably the greatest fund manager of his generation.
Owens isn’t famous like Peter Lynch — known mostly for having a great performance run at Fidelity Magellan Fund, retiring on the top of his game, and writing some popular investing books. Nor is he infamous like Bill Miller of Legg Mason Value Trust, who had a decade-plus run of beating the Standard & Poor’s 500 Index SPX -0.31% only to tarnish his reputation when the market beat him down severely.Owens isn’t someone you see on television or read about. In almost 20 years of covering the fund industry I never talked to him; the two times I made an interview request, he was unavailable.Owens, who plans to step down from Vanguard Health Care Fund VGHCX -0.21% at the end of this year, made his reputation the old-fashioned way: He earned it.Healthy profitsOf the almost 400 mutual funds that went through the stock market crash of 1987 and are still around today, Vanguard Health Care stands on top. Over the last 25 years, the specialized sector fund is up a cumulative 3,033%, for an annualized return of more than 14.8%, according to fund-tracker Lipper Inc. And all of that performance is attributable to Owens, 65, who has run the fund from the start almost 30 years ago.
The second-best open-end fund over that time period is Fidelity Select Software and Computer Services FSCSX -0.34% , which has delivered a cumulative gain of roughly 2,550%, or an annualized average return just north of 14%; it has been through numerous manager changes.In third place is FPA Capital FPPTX +1.01% , which has delivered roughly 2,175% cumulatively, or 13.35% annualized over the past quarter-century.In other words, the difference between Owens and the second-best continuous manager of the last quarter-century was about 1.5% annually. Had you invested $10,000 with Owens right around the time of the October 1987 market crash, you’d have roughly $305,000 today, compared to about $220,000 in the FPA fund.The S&P 500 index, meanwhile, gained almost 700% since the market crash, turning $10,000 into about $70,000.Owens didn’t just beat the market; he murdered it....MORE