Two Des Moines-area investment managers have been rated among the best in the nation in a recent issue of Barron’s, a weekly financial news magazine.

Charles Happel of EquiTrust Financial Services and Bill Nolan of Principal Global Investors, the asset management arm of Principal Financial Group Inc., were named to a list of the top 100 fund managers in the magazine’s Aug. 4 issue. The article, titled “The Top 100: A Breed Apart,” was compiled using research from Value Line Inc., which screened 650 fund managers.

Happel’s EquiTrust Series Managed Portfolio has delivered a 3.7 percent annual return over the past five years and 10 percent over the past three years. That growth has slowed to 5.3 percent in the past year, but the fund has shot up by 12 percent since Jan. 1.

His $42 million fund is categorized as a “flex fund” because Happel and co-managers Bob Rummelhart and Doug Higgins have wide discretion in choosing asset allocations.

Under the fund’s investment parameters, the trio is able to invest all of its capital in either stocks or bonds, or a mixture of the two. The composition of the fund’s assets doesn’t shift quickly. A 2 percent move in a week “would be a big shift,” he said.

Happel looks for companies that are trading at the low end of their historical price-earnings ratios and that pay a good dividend. Right now, energy, financial and oil companies are among his favorites, he said. If stocks meeting these criteria are difficult to find, he analyzes interest rates and considers a move into bonds.

“Our real objective is to make money on the capital side, and use bonds as a place to hide or stabilize any volatility in the fund,” Happel said.

The Waverly native began his career as an insurance agent for Farm Bureau Life Insurance Co. after earning a degree in construction management from the University of Northern Iowa. He moved to Farm Bureau’s parent company, FBL Financial Group Inc., in 1986 and completed an M.B.A. from Drake University. He later earned certification as a certified financial analyst.

Over five years, Nolan’s fund has returned an average of 2.8 percent. Over three years, that average dips to 2.3 percent. In the past year, however, growth has accelerated to 4.2 percent, and it has fund has posted a remarkable 18.9 percent growth so far this year.

Nolan, 35, grew up in Spencer and earned an undergraduate degree at the University of Iowa. He has an M.B.A. from the Yale School of Management and learned credit analysis early in his career as a bank examiner for the Federal Deposit Insurance Corp.

He has worked at Principal for 10 years and has been managing funds since 1999. Today, the assets under his management total $1.8 billion. He focuses on mid-cap and what he calls mid-cap core stocks.

The companies he is interested in are neither value-oriented or growth stocks. Instead, he prefers to buy “high-quality companies” that have sustainable competitive advantages. “And we don’t overpay,” he said.

Among the companies he likes now is Gentex Corp., a maker of automobile mirrors that dim automatically. The company has an 80 percent share of the market, no debt and $400 million in cash, Nolan said.   He also favors TCF Financial Corp., a Twin Cities-based holding company, whose main subsidiary, TCF National Bank, “acts more like a retailer,” Nolan said. For example, the bank is open seven days a week, including some holidays. One of its Chicago branches opened 1,500 new checking accounts on Memorial Day this year, Nolan said.

Value Line’s list isn’t a straight measure of a portfolio manager’s performance. Instead, the company measured managers’ risk-adjusted performance during their tenure compared with how similar funds performed. Some managers lost money in recent years.

However, they have lost less, on a risk-adjusted basis, than other funds in the same category. Nearly 70 of the top 100 managers posted returns that were in the black for the one- or three-year period that ended June 30. Value Line’s approach gives more weight to recent performance.