PEOPLE: JOHN REKENTHALER, BACK HOME AT MORNINGSTAR AND GLAD OF IT

The return of John Rekenthaler to Morningstar Inc., the Chicago fund researcher where he spent most of his working life, comes as no surprise.

His move last year to John Nuveen & Co. Inc., a Windy City company known for its broker-sold municipal-bond funds, was considered a strange fit at the time by many in the industry.

Mr. Rekenthaler, 37, had made his name as publisher of the flagship Morningstar Mutual Funds publication and an outspoken advocate for individual investors. Many wondered how he’d mesh with Nuveen’s conservative culture after coming of age in the casual, freewheeling surroundings at Morningstar.

The bigger problem, it turned out, was the ill-defined nature of Mr. Rekenthaler’s job at Nuveen. His title was investment strategist, a position in which he was supposed to be something of a liaison with the press and public, as well as an investment consultant to the brokers who sell Nuveen’s funds.

“In that business, it’s pretty simple. It really is,” Mr. Rekenthaler says.

Nuveen, like other load fund families, tries to put together solid performing mutual funds and then sell them to brokers using a lot of face-to-face marketing.

“I wasn’t really doing either one of those,” he says, adding that there wasn’t much of a role in dealing with retail investors, either.

Investors not involved

“The Nuveen investors are just not very involved. That’s why they’re going through a full-service brokerage firm,” he adds. “It kind of sounded good, but it didn’t work out in practice.”

A Nuveen spokesman says that someone will be hired to continue the investment strategist’s job functions, though they may be given a different title.

“I think John left (Morningstar) on great terms,” says Liz Michaels, former chief operating officer at Morningstar and now an executive at Jellyvision Inc., a software manufacturer. “He was an enormous contributor to the company.

“It’s always a little hard going backwards,” she says, but adds that she believes Mr. Rekenthaler gained valuable insights from his time at Nuveen.

Mr. Rekenthaler, after several months of indecision, swallowed his pride and opted to return to Morningstar, where he will be director of research and report to newly installed chief operating officer Timothy Armour.

It wasn’t a decision made lightly. Mr. Rekenthaler took a pay cut to do it, but figured happiness is more important than money. “I’m getting paid enough,” he says. “You want to have a job you love.”

At Morningstar, much of Mr. Rekenthaler’s research will concentrate on portfolio management, trying to develop novel ways of combining individual stocks with bonds and mutual funds. Much of his work likely will be included in Morningstar’s Principia database, geared toward independent investment advisers.

“What we really hope for and expect from John is something different from (traditional) asset allocation,” which tends to focus on passive investing, says Don Phillips, Morningstar’s president.

best of both worlds?

“It’s an asset allocation application that takes into account the benefits of active management and concedes it’s messy,” he adds. “It has to do with how you can get the best of both (the active and passive) worlds. I think it’s a lot of what the advisers are doing. This is exactly the issue they’re struggling with.”

Mr. Rekenthaler also expects to play a significant role in Morningstar’s new institutional group, which does custom research projects for mutual fund firms, brokerages and other investment firms.

And he will resume his former role as one of Morningstar’s chief emissaries to the public, taking some of that load off Mr. Phillips, who speaks at numerous conferences and functions.

So has Mr. Rekenthaler now come to the realization that he’s a Morningstar lifer?

“I think so,” he says. “I’m certainly not in the mood to take calls from headhunters, that’s for sure.”