Morningstar Fund Manager of the Year Award (Hong Kong) 2006

. The fund should outperform its peers in the respective asset/region group during 2006, as well as in trailing 3-, 5- and 10-year periods, depending on its history available.

Risk and return are highly correlated. The most important question for investors is how much they will get for taking a given level of risk. It is not always the case that investors are paid for taking high risk. Thus we use the proprietary Morningstar Risk-adjusted Return (MRAR) to measure how much investors get after adjusting the risk. We also look at how well the managers have done in risk controls and, essentially, if they have effectively limited downside variations. Of course, we cannot miss out costs, as this is a factor that has significant impact on long-term performance; for costs, the lower the better. Last but not the least; we will also compare the value-added by the managers in the same group.

On the qualitative front, who manage funds is no doubt very important to investors. We firstly want to see if a fund's great performance can be attributed to the current management team. We check the tenure of each manager on board with a favor toward stable management. For those managers who have experienced the whole market cycle, both up and down, they can be more able to deliver consistent and better performance in the future.

Last but not the least; we look for managers that build their records on consistent investment strategies, since it is important for investors to know what they can expect from their funds. In essence, we are not looking for one-year hero, but long-term winners, because we want to make things easier for investors to identify reliable long-term investments.

For the 2006 winners announcement and our commentaries, please visit here.