A Youth Movement That Really Isn’t

U.S. mutual fund companies like Fidelity Investments and Aim Management Group are known for handing billion-dollar portfolios to managers barely in their 30s. Sometimes they’re even younger.

Fidelity Investments recently picked Erin Sullivan, 27, to manage its $1.68-billion Emerging Growth Fund. Bob Kippes, 31, manages Aim’s $2.4-billion Aggressive Growth Fund.

“These examples are more the exception than the rule,” said Richard Lannamann, managing director at Russell Reynolds Associates Inc., an executive search firm based in New York.

A report by the research group Morningstar Inc. determined that the average age of stock fund managers is the mid-40s. To be more precise, the average age in a survey of 381 fund managers that oversee diversified U.S. equity funds is 47 1/2, Morningstar reported.

The survey is a small sampling relative to the more than 7,000 mutual funds now sold in the U.S., but it does give an insight about the age of managers.

Fund managers included in Morningstar’s sampling ranged from people like Irving Brilliant, 78, who runs the Salomon Bros. Opportunity Fund, to Christine Baxter, 28, who oversees the PBHG Emerging Growth Fund and the PBHG Limited Fund.

“It’s the mutual fund industry’s urban myth that mutual fund managers are so young,” said Don Phillips, Morningstar’s president. “There are some managers in their 20s, but there are many more that are in their 60s.”

Sheldon Jacobs, who writes the newsletter No-Load Fund Analyst from his office in Irvington, N.Y., said a manager’s age doesn’t really matter in the end.

“If a manager’s fund is fully invested in stocks and the market goes down, it doesn’t matter whether you’re young or old, the fund is going down,” Jacobs said.

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However, it’s the experienced managers who attract the most interest from financial advisors and recruiters.

Tim Medley, a financial advisor in Jackson, Miss., said his list of top fund managers includes Shelby Davis, 59, manager of Selected American Fund, and James Gipson, 54, manager of Clipper Fund.

“The young gunslingers we do like are Robert Sanborn of the Oakmark Fund and William Dutton of the Skyline Special Equities Fund,” Medley said. Sanborn is 39, and Dutton 43.

Lannamann, a fund manager recruiter, said he’ll only recruit portfolio managers who’ve overseen other people’s money for at least five years.

“We only look at people who have a credible track record, and it’s rare that these people have less than five years of experience,” Lannamann said.

Stock fund managers with at least five years of experience take home about $370,000 in total cash compensation on average, according to a survey by Buck Consultants Inc. The survey excludes stock options and other incentives that can add hundreds of thousands to a manager’s total compensation package.

In a nutshell, it’s the managers’ ability to attract assets and generate high returns for shareholders that determines how much they make.

And, on this basis, it doesn’t really matter whether the manager is young or old.