Morningstar has released their picks for Best Mutual Fund Managers of 2009. It’s important to remember that the competition is intended as an acknowledgement of past achievements, not as a recommendation for future performance..

That being said, the rankings are determined by a number of factors, not just best return for the calendar year. And the results are given in three categories: Domestic equities, international equities, and fixed income.

Here are the winners.

Domestic Equity

Bruce Berkowitz of Fairholme Fund (FAIRX)
2009 Return/Percentile Rank: 39.0/9th

The Fairholme fund returned 39% (12.5% better than the S&P 500) despite not holding any technology stocks and keeping 17% in cash!

Much of what made this fund perform so well is what the Mr. Berkowitz did in 2008 and 2007.

International Equity

The Team at American Funds EuroPacific Growth (AEPGX)
(Stephen Bepler, Mark Denning, Robert W. Lovelace, Carl Kawaja, Sung Lee, Nicholas Grace, Jonathan Knowles, and Jesper Lyckeus)
2009 Return/Percentile Rank: 39.1%/15th

This fund did so well because the management team was in the right place at the right time – developing markets (i.e. emerging markets!), which went on a tear in 2009. The also reduced their cash stake to 5% in time to catch the market bottom and ensuing rebound. Nice work.

Fixed-Income

The Team at Loomis Sayles Bond (LSBRX)
(Dan Fuss, Kathleen Gaffney, Matthew Eagan, Elaine Stokes)
2009 Return/Percentile Rank: 36.8%/14th

This team owes its success to a contrarian approach and the discipline to stick to that approach when times got really tough. The team went bargain hunting in corporate bonds just before the bottom fell out in 2008, and panic ensued.

They kept to their plan, convinced that the panic was overblown, and it paid off… to the tune of a 36.8% gain. Not too shabby for a fixed income fund!

Be sure to read the full article from Morningstar to get all the details on these terrific managers, as well as the process for picking them.

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