(PUB) Investing 2015

14

Fund News

Fund Manager Changes

AMG GW&K Core Bond MBDFX Date: 02-28-15 AMG fired PIMCO and replaced it with GW&K. It also renamed the fund from its former name AMG Managers Total Return Bond Fund. The fund had been a near clone of PIMCO Total Return PTTRX but will now be run by institutional money manager GW&K. Mary Kane will serve as manager. Kane has a brief two-year tenure at AMG GW&K Enhanced Core Bond Investor MFDAX, which has performed well during her tenure. | Our Take: The fallout from Bill Gross’ departure keeps coming. GW&K has a good reputation, but we don’t cover any of its funds yet. Impact: Negative Date: 01-05-15 Kent Gasaway left the fund to focus on Buffalo Small Cap BUFSX, and Dave Carlsen replaced him as comanager. Bob Male remains as comanager. | Our Take: This is the second round of manager changes at Buffalo in recent years, and it comes amid slumping performance. In addition, Carlsen doesn’t have a long and meaningful track record. Thus, we have downgraded the fund to Neutral from Bronze. Date: 04-05-15 Comanager Jeff Kautz resigned. Kevin Preloger, who was named comanager in April 2013, remains and will be joined by Justin Tugman of Perkins Small Cap Value JSCVX. | Our Take: The fund has been trying to get back on track after several years of underwhelming performance. The fact that its five- year results aren’t up to par isn’t surprising or disappointing given the fund’s relatively conservative process, but weak stock-picking is more cause for concern. The loss of a long-tenured manager is disappointing but not insurmountable. Risk-adjusted results since inception remain strong. However, the departure, coupled with the fund’s stock-picking woes, is enough to move this fund’s Morningstar Analyst Rating to Bronze from Silver. Date: 11-10-14 Whitney George has left Royce after being mired in a severe slump. At Royce Low Priced Stock, Jim Stoeffel is now the lead manager. He had been an assistant manager since 2013 and worked for Royce since 2009. At Royce Premier, Chuck Royce shifts from comanager to sole lead manager. | Our Take: Stoeffel produced decent results during a previous stint at CRM Small Cap Value CRISX, so there are some positives here, but he doesn’t have George’s track record. The firm says that Royce Low Priced Stock will return to its roots with lower-priced stocks and will shed the materials stocks that have killed performance. We lowered that fund to Neutral. Premier’s change is less dramatic. George’s half of the portfolio will go to Royce, who was already running the other half. We rate Royce Premier Silver. Impact: Negative Date: 04-01-15 Bob Smith stepped down this year; Richard Clattenburg took his place. Clattenburg has been with T. Rowe Price since 2005, serving as an analyst and associate portfolio manager. | Our Take: Clattenburg lacks a record, so it’s a big drop from the seasoned Smith. We’ve lowered our rating to Neutral. Impact: Negative Date: 06-01-15 Veteran manager Larry Keele is stepping down and being replaced by Stuart Spangler. | Our Take: Oaktree is an excellent firm so we remain confident in the fund, but it’s still a blow to lose Keele, who has built a great record here. We lowered our rating to Bronze. Impact: Neutral Buffalo Mid Cap BUFMX Perkins Mid Cap Value JMCVX Impact: Negative Royce Low Priced Stock RYLPX and Royce Premier RYPRX Impact: Neutral T. Rowe Price International Stock PRITX Vanguard Convertible Securities VCVSX

Shakeup at Manning & Napier Morningstar is reviewing all rated Manning & Napier funds following the departure of two of the firm’s senior investment professionals and the reorganiza- tion of its research groups. We lowered World Opportunities and Equity to Bronze and have the Pro- Blend series of funds target-date funds under review. On March 12 , 2015 , Manning & Napier announced the departures of two members — Jack Bauer and Brian Gambill — of its 14 -member senior research group. Bauer, who is retiring after more than two decades with the firm, had been a member of the SRG since 1992 and led the firm’s fixed-income portfolio group. Gambill joined the SRG in 2002 and ran the firm’s capital goods & materials sector group. That group covers energy stocks, which was a notable source of underperformance in 2014 and over the five-year period through December 2014 . The tenure and stability of the SRG have been two of the firm’s strong points. The most recent departure prior to these two occurred in 2001 when Ebrahim Busheri left, though he rejoined the firm in 2011 . Concurrent with these two departures, Manning & Napier reorganized its research groups. Busheri has assumed the role as director of investments. That role will encompass the responsibilities previously held by Jeff Coons and Jeff Herrmann as co-directors of research. Coons remains president of the firm, and Herrmann will help fill the void left by Gambill’s exit from the capital goods & materials sector group. Busheri, Coons, and Herrmann will remain on the SRG , and that group has been cut to five members from 14 . (Marc Tommasi and Christian Andreach are the other two members.) Most members of the SRG were previously collectively named on the firm’s flag- ship funds, and the changes in the group’s structure will likely entail changes to those funds’ rosters.

Vanguard Intermediate-Term Treasury VFITX, Vanguard Long-Term Treasury VUSTX, Vanguard Short-Term Treasury VFISX

Impact: Neutral

Date: 01-02-15

Gemma Wright-Casparius has replaced David Glocke as manager of the three funds. Wright-Casparius is head of Vanguard’s TIPS and Treasuries group and manager of Vanguard Inflation-Protected Securities VIPSX fund. | Our Take: The fund remains in good hands. We have affirmed our Silver rating on the funds.