14
Correction
The December issue of
FundInvestor
had incorrect
regional weightings for foreign-stock and world-stock
funds. We regret the error.
Sequoia Closed
Sequoia Fund
SEQUX
has closed to new investors.
In order to avoid a last-minute rush, the firm didn’t
give advance warning.
Managers Bob Goldfarb and David Poppe said that
their goal is to limit asset growth so the fund can
continue to take meaningful positions in mid-cap
stocks. While the portfolio includes mostly large-cap
names,
30%
of the portfolio is in small- and mid-
cap companies. Plus, nearly four years into a robust
bull market, the duo is having a difficult time finding
new buying opportunities. The fund’s cash stake is
nearly
18%
of assets, too, although the fund has long
held a sizable cash cushion.
Vanguard Cap Opp Closes
Vanguard closed
Vanguard Capital Opportunity
VHCOX
to new investors. Vanguard said existing
investors can invest up to $
25
,
000
a year in new
money in the fund. However, clients of Vanguard
Flagship services and Vanguard Asset Management
can still establish a new account in Vanguard Capital
Opportunity. Vanguard didn’t provide any advance
notice on the closing. While it may annoy those who
wished to get in, it does prevent a last rush of cash
from piling in.
Yacktman Funds Close
Yacktman Fund
YACKX
and
Yacktman Focused
YAFFX
closed to new investors at year-end.
Vanguard Bond Fund Reopens
Meantime, Vanguard has reopened
Vanguard High-
Yield Corporate
VWEHX
. “The fund was closed to
Fund Manager Changes
Fund News
Fidelity Dividend Growth FDGFX
Impact: Negative 01-01-14
Ramona Persaud is replacing Larry Rakers on the fund. Rakers is moving to Fidelity’s asset-allocation group.
|
Our Take: Rakers’ strong track record and Persaud’s short record make this a negative change. We have placed
the fund’s rating under review. However, one positive is that Persaud is likely to follow a true dividend growth
strategy whereas Rakers was a wide-ranging investor with a penchant for cyclical stocks. The move may be a
logical extension of Fidelity’s effort to make its Equity Income funds actually focus on dividends for a change.
Vanguard and T. Rowe Price run dividend growth strategies that have produced excellent risk-adjusted returns.
PIMCO Global Multi Asset PGMDX
Impact: Neutral 11-17-13
PIMCO has replaced lead manager Saumil Parikh with Mohamed El-Erian. El-Erian will review the fund’s
allocation moves, which have not been timed well.
|
Our Take: The fund was designed to be cautious,
so its lagging returns recently are no shock, but the fund has been disappointing even in the context of
cautious allocation strategies. On one level, having El-Erian take over looks like an upgrade. However,
PIMCO is reviewing the fund’s allocation strategy, and we’re always wary of funds when the Under Con-
struction signs go up. We’re rating the fund Neutral.
Selected American SLADX/Davis NY Venture NYVTX/Clipper CFIMX
Impact: Negative 12-17-13
Longtime comanager Ken Feinberg has been removed and was replaced by analyst Danton Goei. Goei had
been regarded as the firm’s top analyst.
|
Our Take: This was a surprise, and we are disappointed to see a key
contributor leave. We have downgraded the funds to Bronze as a result. The change may also result in a
drop in financials exposure, as Feinberg was a big fan of financials whereas Goei has had greater interest in
other sectors.
Vanguard Explorer
Impact: Neutral 12-31-13
Veteran manager Jack Granahan has retired. Comanagers Gary Hatton and Jane White will continue to run
the sleeve of the fund managed by Granahan Investment Management. The firm runs one fourth of Vanguard
Explorer. Our Take: We don’t see a big impact and have maintained our Neutral rating. The fund’s large asset
base and collection of seven subadvisors make this a rather bland fund, and that won’t change with Granahan’s
retirement. The positive is that the fund is pretty cheap, so it doesn’t need to do a lot to catch up with an
index fund.
Vanguard International Growth VWIGX
Impact: Negative 10-30-13
Comanager Virginie Maisonneuve was hired away by PIMCO. She had been a comanager of this fund’s
Schroders-run sleeve since 2005. Schroder runs about one third of the fund, and Simon Webber, who has
been listed since 2009, will be the sole manager of the Schroder sleeve.
|
Our Take: Maisonneuve was
the second-most senior manager on the fund, so it’s a blow. However, as she was a comanager of only one
third of the fund, it’s far from a disaster. The other slices are run by experienced managers at Baillie
Gifford and M&G Investment Management. We are maintaining our Silver rating because the fund still has
strong management and low fees.
Vanguard Precious Metals and Mining VGPMX
Impact: Negative 11-17-13
Longtime manager Graham French is stepping down, and comanager Randeep Somel is replacing him.
|
Our
Take: The move appears to have more to do with a slump in a broad equity fund that the two managed for
M&G Investment. We are putting the rating under review while we look into the change. We don’t expect a
change in strategy, but French has done well at this fund even if the global strategies have suffered.
