T. Rowe Price, Legg managers named year's best in their fields

THE BALTIMORE SUN

Brian Berghuis will likely still have to take out the trash at home, but he has earned his star at Baltimore's T. Rowe Price Group Inc. by being named the best of thousands of individuals throughout the country who manage money in domestic mutual funds.

Berghuis, manager of the T. Rowe Price Mid-Cap Growth Fund, was named domestic mutual fund manager of the year yesterday by Morningstar Inc., the Chicago firm that tracks the industry.

Morningstar also honored Legg Mason's S. Kenneth Leech, chief investment officer of Western Asset Management Co., and other members of his fixed-income fund management team. They oversee the Western Asset Core Bond Fund in Pasadena, Calif.

"I am probably more surprised than you could imagine," said Berghuis, 46, whose fund has $13 billion in assets under management. "It is certainly quite an honor. I have to say this really could have gone to anyone of a number of funds here."

Berghuis, who was notified Thursday, celebrated with his family but isn't too carried away by the honor.

"As my wife says, 'You still have to take out the garbage,'" Berghuis said.

Price's Mid-Cap Growth Fund returned 18.39 percent last year, beating the Standard & Poor's 500 stock index's return of 7.68 percent, according to preliminary numbers by Morningstar that do not include reinvested dividends.

The fund's returns over three- and five-year periods are respectively 8.83 percent and 6.52 percent, compared with the index's 5.30 percent and 8.85 percent. Over 10 years, the fund has returned nearly 16 percent on an annualized basis, placing it among the top 5 percent of all mid-cap funds, according to Morningstar.

Kunal Kapoor, Morningstar's director of mutual fund analysis, said Berghuis didn't stray from his philosophy and plunge into risky Internet stocks during the bubble when other fund managers couldn't resist. When the stock market collapsed, Berghuis began buying shares at value prices, Kapoor said.

"We give this award to managers who we consider to be best of breed, and he certainly ranks up there among them," Kapoor said.

The awards, which are presented annually, are based on the recommendations of Morningstar analysts who follow the mutual fund industry. They look not only look at the past year's performance, but also the track record in previous years and whether the fund makes money in good and bad times.

"We are just looking for managers who are good stewards of investors' capital," Kapoor said.

Leech's Core Bond Fund ranks in the top 2 percent of the intermediate bond fund category with a 10-year annualized return of 8.44 percent, according to Morningstar.

"They have been able to manage the risks much better than peers," Kapoor said. "It speaks to the research intensity of their process."

The fund returned 5.21 percent last year, according to Morningstar. It handily beat its benchmark, the Lehman Brothers Aggregate Bond Index, which returned 1.4 percent. Over three- and five-year periods, Core Bond Fund respectively returned 7.22 percent and 9.12 percent, according to Morningstar.

Leech, 50, declined to comment about the recognition, but his boss didn't hesitate.

"Ken is believed by many to be as good a bond manager that exists in the world," said Raymond A. "Chip" Mason, chairman and chief executive of the asset management firm and brokerage in Baltimore. "His numbers, year after year, are just off the charts."

Berghuis and Leech join an elite group of fund managers who have won the Morningstar award. They include Peter Lynch, who managed the Fidelity Magellan fund; bond-fund manager William H. Gross of Pacific Investment Management Co. (PIMCO), and Mario J. Gabelli of Gabelli Asset Management Inc.

Both Price and Legg have had winners before. John H. Laporte, who manages Price's New Horizon Fund, was named domestic stock fund manager of the year in 1995. William H. Miller III, who manages the Legg Mason Value Trust and has the longest consecutive streak ever - 14 years - of beating his benchmark, was named manager of the year in 1998.

Morningstar also named Dodge & Cox International Stock Fund of San Francisco as international stock fund manager of the year in 2004.

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