The Fruits of Discipline

John W. Rogers Jr. and Ariel Capital Management have harvested huge returns through a 'slow and steady' approach to asset management

and investors.”

As the caretakers of Ariel’s investment products, Rogers, 43, and McKissack, 48, have worked hard to remain pure value investors, even in times when their style has been out of favor. Jim Shirley, a research analyst for Lipper, says Ariel’s exceptional research has allowed them to display a “proven ability to pick good stocks for their mutual funds.” He also points out that the Ariel funds have some of the lowest turnover rates in the industry, a true indicator of the firm’s commitment to patient investing.

The firm has also earned kudos for having a fund management team that has weathered various market cycles. Rogers’ years of professional experience rank him among the most seasoned African American fund managers in the country. McKissack, a University of California at Berkeley M.B.A., with a B.S. in management and architecture from the Massachusetts Institute of Technology (MIT), brings another 20 years of investment experience to the table. (He also has a chartered financial analyst, or CFA, designation.) “It’s important as an investor to pick a mutual fund managed by someone who has had bull and bear market experience,” Shirley says.

The combination of portfolio management experience, stock picking brilliance, and focus on investment style has this small firm of 51 employees outpacing all mutual fund companies in the area where it prides itself most — long-term investing. In addition to its small- and mid-cap vehicles, the firm offers the Ariel Premier Bond Fund (APBFX). According to Lipper, the fixed-income portfolio posted one-year returns of 6.74%, and a three-year
average return of 5.73%, compared to the sector averages of 5.72% and 4.95%, respectively.

The firm’s recent fortunes led to its launching the Ariel Premier Growth Fund (APGFX) on Feb. 1. Does it mean that they’re shunning their tried-and-true philosophy? No way. “In our view, we’re buying, in our naturally contrarian way, growth when it’s out of favor,” says Hobson. Chicago-based Lincoln Capital Management, which has managed Ariel’s bond funds since 1995 and has prior experience managing the $20 billion Vanguard U.S. Growth Fund (VWUEX), serves as the subadvisor for the new fund. Currently, the fund, which has been promoted through print ads and direct mail solicitations, has more than $12 million in assets.

Rogers has had his challenges keeping Ariel on the path of sustained growth. Always having faith in his ability to succeed, he showed great courage in starting the firm in 1983, after working only two years as an analyst for William Blair & Co. in Chicago. He was only 24 at the time, but the entrepreneurial lifestyles of his parents, both lawyers, prepared him for the commitment it would take to build a business from scratch in an industry with few examples of successful African Americans to follow. His father was responsible for Rogers’ conversion to an active investor when he gave him stock as a gift at the age of 12.

With a knack for forging relationships, he teamed up with the Calvert family of mutual funds in 1986 for the

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