And the winner is...

How do you choose the best mutual fund manager in a disastrous year like this?

One method: Select among the top relative performers managing stock funds. That would be an award for damage control, picking among managers who lost less money than their peers.

Another way to go: Focus on the hot sector and select a manager whose fund owns US Treasury securities. Those managers looked very good, in large part, by being in the right place at the right time.

The winner of this year's highly subjective Boston Capital Fund Manager of the Year was chosen by neither of those criteria. Bob Litterst of Fidelity Cash Reserves becomes the eighth annual winner by navigating unprecedented market upheaval and earning a return that puts his fund near the top of its class in 2008.

All money market funds were under enormous stress this fall, and Fidelity Cash Reserves was no exception. The failure of Lehman Brothers Holdings Inc., government intervention at American International Group, and a global financial panic froze short-term debt markets in their tracks.

Some money funds buckled, unable to meet demands from shareholders who wanted their money back. Investors began to question a kind of mutual fund they always considered nearly as safe as cash itself.

"I felt a tremendous responsibility personally," says Litterst, 49, whose fund invests money for 6.2 million Fidelity accounts. "September was a period of the most unbelievable combination of events I have ever seen in my lifetime. Every day we were looking at market events and thinking that it was just shocking."

Along the way, Litterst also became the manager of the biggest mutual fund in America. As the behemoth stock mutual funds shrunk as much as 40 percent, Fidelity Cash Reserves' assets grew about 20 percent, to $134.6 billion by November. The largest stock fund, the Growth Fund for America, managed $116.5 billion at the end of last month.

As Boston Capital's manager of the year, Litterst succeeds many distinguished local fund executives who happen to be suffering this year. The 2007 and 2005 winner, CGM Focus Fund manager Ken Heebner, is down about 50 percent. Dan Rice of the BlackRock Global Resources Fund is doing even worse with a 2008 loss of more than 56 percent so far. The others are dealing with serious problems of their own, though all the previous winners still outperformed the Standard & Poor's 500 index over the past five years.

Litterst is an odd addition to this list. For starters, Fidelity Cash Reserves may be a Boston mutual fund but Litterst actually works with Fidelity's other fixed income managers, analysts, and traders in Merrimack, N.H. (I told you it was subjective). He also considers maximum investment returns his third most important priority under normal circumstances, and in today's conditions a distant third at that. Safety and shareholders' access to their money come first.

Still, Fidelity Cash Reserves is one of the top performing funds in its category in 2008. It had earned 2.86 percent this year through Friday, better than all but five of 327 money market funds tracked by Lipper Inc. And over the past three years, Fidelity Cash Reserves ranks 11th among 304 money market funds.

Earning top-shelf returns was one thing. Keeping a money market fund out of trouble at the same time was a more dramatic feat. At least 25 of 91 mutual fund complexes tracked by Crane Data LLC had to bail out or otherwise lend financial support to their money funds, according to Peter Crane, who runs the Westborough money market research firm.

"The management of [Fidelity Cash Reserves] is not conservative," says Crane. "They in effect hit the rapids and went through unscathed. I think that running a money market fund over the past 15 months without getting dinged is a feat, but running the biggest money fund is just a near miracle."

Litterst disagrees about the risk profile of Fidelity Cash Reserves. He said Fidelity money fund managers had drawn up a more conservative list of companies they were willing to invest with and shifted portfolios to make sure there would always be enough money to pay shareholders who wanted to cash out.

Fidelity analysts looked back at the toughest times at the start of this decade to measure the most active period of shareholder redemptions. Litterst made sure the Fidelity Cash Reserves portfolio would always have the resources to return much more cash than that, if necessary. During the fall, as much as 15 percent of the fund's investments was maturing every day, giving it a steady supply of cash in case it needed to pay back investors.

Litterst also moved more money than usual into US Treasury securities. Those investments did not have very short maturities, but were salable if Litterst needed money. Now Treasury securities account for 20 percent of the fund's portfolio, about four times their typical share.

But customers haven't asked for much of their money. The assets of Fidelity Cash Reserves increased every month this year except September, when they shrank less than 0.2 percent.

The sheer size of Fidelity Cash Reserves and the firm's other money market funds were a kind of two-edged sword through the fall. That scale and Fidelity's long-term commitment to money market funds gave managers an advantage with trading partners and their own shareholders.

"Fidelity has done a phenomenal job of never relegating its money market funds to some sort of second-class citizenship," says Jim Lowell, published of the Fidelity Investor newsletter. "That helps bolster confidence when nothing but fear is crossing the threshold."

But the same scale means Fidelity Cash Reserves constantly needed to buy new securities when short-term holdings in their portfolio matured. Who wants to buy in bulk every day when risk runs so high? Litterst and Fidelity's other money fund managers worked it out.

The best thing to say about this year is that it's almost over. Markets put investors through the wringer in 2008, when safety mattered most, and Bob Litterst emerged as an unconventional choice as manager of the year.

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