Going Long

Jeff Herrmann manages a leading life sciences fund by developing long-term perspectives—and sticking to them.

ANDREW P. MADDEN

Rochester, New York, is far from Wall Street. And that’s as Jeff Herrmann likes it.

From this smallish outpost 350 miles northwest of Manhattan, he oversees the Exeter Life Sciences Series (Nasdaq: EXLSX), the top-performing mutual fund of its kind over the last three years, according to Morningstar’s rankings of Specialty-Health funds. By not getting, in his words, “caught up in Wall Street’s story of the day,” and by applying a long-term investment approach to a sector that is best known for its short-term fluctuations, Mr. Herrmann, who works with a team of six analysts, has generated an annual return of 15.6% over the last three years.The Exeter Life Sciences fund also receives five stars, Morningstar’s top mutual fund rating.

Life sciences stocks, particularly biotechnology issues, elicit the most impulsive sort of investor behavior, and Mr. Herrmann reasons that if there is any safeguard to investing in the sector, it is to resist following the herd. “In the euphoric times, investors are willing to put money into an idea that’s barely been written out on a piece of paper,” he explains. “On the downside of a cycle, you can’t get a single IPO done, and people don’t think about the future. We try to take advantage of the times when people are being myopic.”