(PUB) Investing 2015

14

Fund News

Fund Manager Changes

American Century Small Cap Value ASVIX Impact: Negative Date: 11-01-14 Lead manager Ben Giele has left the fund in the hands of comanagers Jeff John and Miles Lewis. | Our Take: Giele had a strong track record, and John and Lewis have brief track records. In fact, Lewis has none while John has been a comanager only since 2012. We lowered our Morningstar Analyst Rating to Neutral as a result. Impact: Negative Date: 10-09-14 Comanager Abhay Deshpande has departed. Matthew McLennan and Kimball Brooker Jr. remain as managers. | Our Take: The funds remain in good hands, but they look a little shorthanded with more than $60 billion to manage. First Eagle let these funds get quite large before closing Overseas, and that’s quite a lot for the two managers to handle. We lowered the funds’ ratings to Bronze from Silver. Date: 12-01-14 Jim Goff stepped down as head of research and nominal manager of this fund. Carmel Wellso succeeds him. | Our Take: This is a research fund that delegates stock selection to the analysts. In this case, the named manager doesn’t have the same impact as at a typical actively managed fund. 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 is set to step down this year; Richard Clattenburg will take 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 will post a new rating shortly. First Eagle Global SGENX, First Eagle Overseas SGOVX Janus Global Research JAWWX Impact: Neutral Royce Low Priced Stock RYLPX and Royce Premier RYPRX Impact: Neutral T. Rowe Price International Stock PRITX Vanguard Convertible Securities VCVSX

Primecap Leads Manager of the Year Winners While the Morningstar Fund Manager of the Year award winners have distinguished themselves in the past calendar year, we’ve never simply chosen the highest-returning funds. The awards recognize managers who have not only just completed outstanding years but have also tacked on a winning year to their already stellar long-term track records. Our winners have generated strong long-term risk-adjusted returns and have been strong stewards of their investors’ capital. Beyond having had a great year and possessing an excellent long-term record, our winners must have current Morningstar Analyst Ratings of Gold, Silver, or Bronze, indicating that our analysts have conviction in the managers’ ability to outperform their categories and/or benchmarks on a risk-adjusted basis over the long haul. Domestic-Stock Fund Manager of the Year Theo Kolokotrones, Joel Fried, Al Mordecai, Mohsin Ansari, and James Marchetti of Primecap Odyssey Aggressive Growth POAGX and Vanguard Primecap VPMCX The team from Primecap has subadvised Vanguard Primecap for the past 30 years and Vanguard Capital Opportunity for the past 20 , and it has been advising three direct-sold Primecap funds for the past decade. The funds are all variants of the same patient con- trarian growth strategy, which is based on finding stocks with great long-term growth prospects at discount prices and being willing to hang on to them until the market recognizes their worth. This publicity-shy team quietly goes about its business, with each manager handling his own sleeve of the portfolio and some senior analysts also getting smaller sleeves to run. Because they all hew to the same investment philosophy, the overall portfolio often has significant sector or industry overweight- ings, but those result from independent decisions made by different managers rather than a single deci- sion to place a big bet in one area of the market.

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.

Vanguard Short-Term Federal VSGBX Date: 01-02-15 Brian Quigley has replaced Ron Reardon as portfolio manager of this fund. Quigley has worked on the fund since 2007. | Our Take: Quigley is experienced, and the fund doesn’t have much flexibility to begin with, so we don’t expect any big changes. We are maintaining our Silver rating. Impact: Neutral