BusinessWeek just released their list of the best mutual fund managers of 2005. There's a couple items you should note about their ranking system.

Choosing the best fund managers is difficult because:

1) They are usually rated on performance in their fund categories. There's only a limited number of fund categories and many funds aren't easily categorized. Sometimes a fund will win it's category when it shouldn't (let's say it held some international stocks that did well, even though the fund is listed as a primarily domestic fund) and other times it will be put in a category that doesn't really fit (take a fund of funds, for example).

2) Tenure - or years of running the fund are often accounted for, though newer fund managers or managers who switched funds can also be good managers. BusinessWeek used a 5-year minimum in their picks.

3) Fund size can make life easier or more difficult for a fund manager. BusinessWeek used a $100 million minimum.

4) There's always a degree of luck involved. That's why the winners change every year (with some exceptions). Take, the Tweedy, Brown Global Value fund (TBGVX) run by Christopher H. Browne. He was picked as one of the top fund managers by BusinessWeek in 2003, but he proceeded to underperformed his own category by over 25 percent that year and by five percent in 2004.

The point is that you should only take these "Best Fund Manager of 20XX" ratings with a grain of salt. They help sell magazines, but they might not help your portfolio. To learn more about what makes a good fund manager, read "What to Look for in a Fund Manager."

Asset allocation is more important than picking the best performing fund of the category.