Kris Jenner is quick to point out that you don't have to be a doctor to successfully manage a mutual fund that invests in the medical industry.
"You don't need a medical background," said Jenner, who was trained as a surgeon and since 2000 has managed T. Rowe Price's Health Sciences Fund.
But from the looks of it, having an MD at the helm of a fund — and another on its analyst team — doesn't hurt. Health Sciences boasts Lipper's top scores for total return, consistent return and capital preservation as well as low expenses.
Year to date, the fund — which invests in companies that research, develop, produce and distribute health-related products — has returned 18.49%, compared with 14.62% for its category, according to Lipper. It has comfortably beaten its category over one, three, five and 10 years.
"I think the fund has been successful because it's navigated the risks it's taken really well," said Christopher Davis, senior fund analyst at Morningstar Inc.
For Jenner and G. Mark Bussard, a medical device analyst for Health Sciences, the fund's high marks sum up successful second careers.
Jenner holds an MD from The Johns Hopkins University School of Medicine, and he completed two years of a general surgery residency at the Johns Hopkins Hospital. In a sign of his earlier interest in investing, Jenner has also managed a small hedge fund.
Bussard, meanwhile, earned his medical degree at the University of Virginia, where he was also a resident in general surgery. Before joining T. Rowe, Bussard co-founded an early stage biotechnology company that ultimately failed.
Both men found their way to T. Rowe after realizing that their dream career did not satisfy them.
"I was one of those people who was premed from age 6," Bussard said with a laugh. "I always thought I wanted to be a doctor, and I got there 20 years after making the decision, without really re-evaluating it."
As for Jenner, he said the investment world suits his competitive personality. "For whatever reason, when I went to the hospital in the morning I did not believe I could be the greatest surgeon or doctor," he said. "There was something missing; I just wasn't excited."
In his current job, trying to beat his peers — with performance numbers clearly showing the results — provides part of Jenner's inspiration.
"I don't think we're the best in the world — yet," he said. "But I have no specific reason as to why we can't be."
Clearly measurable outcomes also appeal to Bussard, who joined the fund in 2004. "In medicine, success can be really, really variable," he said. "It's not clear what makes a good doctor — is he an expert in a certain technology? Does he have better outcomes? A nicer personality?"
In the mutual fund world, a fund's team knows that outcomes and successes can be measured in absolute terms, Bussard said.
In many ways, the men say, their medical backgrounds have translated smoothly to the business of investing. One advantage is a thorough understanding of the subject matter that medical technology companies deal with.
"If you've kind grown up in that [medical] environment, you more or less know that these people may sound incredibly sophisticated and knowledgeable," Jenner said. "But you do know the limits of their knowledge."
Morningstar's Davis, however, said that the healer aspect of a doctor's personality might cloud his or her thinking as an investor.
"You could be really impressed by the gee-whiz technology and not necessarily think, 'Is this company a good investment?' " he said.
Another advantage of having a medical background, Jenner said, is the ability to act without hesitation.
When he and Bussard were training as surgeons, they often had to intervene surgically — in life-or-death situations — without having all the information they'd like to.
In medicine, acting quickly can save lives, while in investing, it can mean better returns, Jenner said. Both settings call for making decisions based on probable outcomes, not complete information.
"If we had perfect information, then the return potential would be diminished," Jenner said. "Everyone would know all the facts, not just us."
