Manager of the year

A year ago, mutual fund managers looked forward and warned it wouldn't be so easy to make money in 2006. They were dead wrong.

Fund managers, who almost uniformly produced gains in 2005, are doing better this year. Any stock fund manager who hadn't generated a double-digit return by Christmas is well below average. Bond fund managers are doing just fine, too.

A year like this produces plenty of candidates if you're trying to single out one Boston fund manager. This year's choice for the flagrantly subjective Boston Capital mutual fund manager of the year is Maura Shaughnessy of MFS Utilities fund.

Shaughnessy is producing big numbers, but also has been superior among managers working in her part of the market over the past three, five, and 10 years. Her $2.4 billion mutual fund also holds the best 10-year performance record at MFS Investment Management.

She joins an impressive list of previous winners: Ken Heebner of CGM Focus (2005), Dan Rice of Blackrock Global Resources (2004), Dan Fuss of Loomis Sayles Bond (2003), Will Danoff of Fidelity Contrafund (2002), and Joel Tillinghast of Fidelity Low-Priced Stock (2001).

As usual, there are other Boston managers who deserved consideration this year. In particular, Joe Joseph and the rest of the team managing the Putnam International Capital Opportunities fund have had a great year.

Even within the utilities stock sector, Boston can claim several standout managers. Tim O'Brien of the Evergreen Utility and Telecommunications fund routinely ranks in the top quarter of his field and is enjoying another good year. Judith Saryan of the Eaton Vance Utilities fund has run neck-and-neck with Shaughnessy for six years but produced modestly lower results so far this year.

The MFS Utilities fund had earned 31 percent for 2006, through late last week, almost double the return for the S&P 500 index and roughly 10 percentage points over the S&P's benchmark for utility stocks. Shaughnessy has earned an average of 28 percent a year over the past three years and 15.6 percent annually over the past five year. Her fund has gained 13 percent a year on average over the past decade.

The key to Shaughnessy's investment style over the past 10 years has been flexibility. Her MFS Utilities fund has focused on different industries over time, shifting among telecommunications, cable, and power. It has emphasized stocks, but also chased opportunities in bonds and preferred shares at times. Today, flexibility means spreading the portfolio around the globe.

"If they're in Argentina, Massachusetts, or wherever, it doesn't really matter to me," says Shaughnessy. "It's about finding the best relative idea." That priority has led her to now invest a third of her fund outside the country.

"Being very flexible on geography makes it easier to understand how to make relative calls across industries," she says. In the second quarter, "when everyone was freaking out over emerging markets," she bought stocks. "Some of them have doubled," she notes. "Taking advantage of that international platform has been a big value for the fund over time."

Power generation and transmission companies dominate the top holdings list at MFS Utilities today. NRG Energy Inc. was the biggest stock in the fund on Nov. 30. The top five also included Williams Cos. , Edison International , FPL Group Inc., and Equitable Resources Inc .

"We're definitely there on the power-generation front," she says. "I'm not a theme investor, but that's a theme. A couple of years ago we were in an oversupply situation with power. We're headed into a mess of undersupply."

What about new investment ideas for the year ahead? "They're harder to find right now," says Shaughnessy.

That sounds familiar.

Steven Syre is a Globe columnist. He can be reached at syre@globe.com.