14
First Eagle Overseas to Close
First Eagle Overseas
SGOVX
is closing to new
investors as of May
9
. The Silver-rated fund has $
14
.
9
billion in assets.
Jerry Palmieri Dies
Jerry Palmieri, who had been at the helm of the
Bronze-rated, $
9
.
8
billion
Franklin Growth
FKGRX
since
1965
, died at age
85
.
Palmieri was the first-ever recipient of Morningstar’s
Fund Manager of the Year award in
1987
. He had
been with Franklin Templeton since
1963
and was the
longest-tenured manager in the large-growth
Morningstar Category.
Morningstar managing director Don Phillips, who was
with the firm for the very first Fund Manager of the
Year award, recalled that the award, aimed at recog-
nizing managers’ longer records and attention to
risk instead of simply focusing on which manager had
produced the highest returns of the year, was a fairly
radical idea at the time. In tapping Palmieri, Phillips
said, Morningstar was giving kudos both to his solid
short-term performance and, more important, to his
longer-term track record and ability to make money
for his investors.
Palmieri and Franklin together had laid out a clear
succession plan in
2008
when they tapped
Serena Perin Vinton as Franklin Growth’s desig-
nated successor.
TIAA-CREF Buys Nuveen
TIAA
-
CREF
announced that it will acquire Nuveen
Investments from private equity firm Madison Dear-
born Partners. Both firms have Morningstar Parent
Ratings of Neutral. In all, the consolidation of the
two firms will bring
TIAA
-
CREF
’s total assets under
management up to $
790
billion from $
569
billion.
Fund Manager Changes
Fund News
Appleseed APPLX
Impact: Negative 06-30-14
Ronald Strauss and Rick Singer are set to retire at the end of June.
|
Our Take: We are maintaining our
Bronze rating because three comanagers remain who have been leading the way. Bill Pekin, Adam
Strauss, and Josh Strauss are the managers we’ve spoken to over recent years, and we feel comfortable
with them in the lead.
Franklin Growth FKGRX
Impact: Neutral 04-06-14
Comanager Jerry Palmieri died at age 85.
|
Our Take: We are saddened to hear of the passing of our first
Manager of the Year award winner. From a practical standpoint, Palmieri had not been involved in day-to-day
management for a number of years, so we are maintaining our Bronze rating of the fund.
PIMCO Global Multi-Asset PGMDX
Impact: Negative 03-01-14
Mohamed El-Erian left PIMCO. Mihir Worah took his place as lead manager. Worah runs inflation-protection
strategies for PIMCO.
|
Our Take: Losing the heir apparent to Bill Gross is a blow for all of PIMCO, including
this fund. Although Worah is mostly a bond manager, he has other experts on stocks and tail-risk hedging
who will help with the fund. Given the fund’s disappointing record, it will be interesting to see if Worah
makes changes to its strategy.
Scout International UMBWX
Impact: Negative 03-31-14
James Moffett is transitioning off the fund over the course of the year. In a letter to clients, he said current
comanager Michael Stack will be promoted to co-lead portfolio manager on March 31 and become sole lead on
Jan.1, 2015. Moffett plans to remain at the firm, though he won’t be a named manager on this fund. Stack has
been with Scout since 2006 and has 18 years of investment experience. Michael Fogarty remains a co-portfolio
manager.
|
Our Take: Moffett’s departure isn’t a surprise given his age (72), but it’s still a loss. During the past
three years, we downgraded the fund’s rating first to Silver and then to Bronze because Moffett was several
years past conventional retirement age, and discussions with him indicated that he was preparing successors.
While Stack and Fogarty are steeped in the process, they don’t have the track records of lead managers that
would have led us to keep the fund at Silver. We have placed our rating Under Review.
T. Rowe Price Growth Stock PRGFX
Impact: Negative 01-16-14
Rob Bartolo resigned and was replaced by Joe Fath. Fath served as an associate portfolio manager on
T. Rowe Price Institutional Large Cap Growth TRLGX.
|
Our Take: Fath has a decent record as an associ-
ate portfolio manager, but it isn’t the same as having the final say on a portfolio. In addition, we want to
see what process tweaks are in the works. We have lowered our rating to Neutral from Bronze.
Third Avenue International Value TAVIX
Impact: Negative 06-30-14
Amit Wadhwaney is leaving. Matthew Fine, who has comanaged the fund since 2012 and had been an
analyst on the fund since 2003, will take over as the lead manager. Wadhwaney’s exit comes in the wake
of other departures from the international team. In April 2013, Jakub Rehor, who had been a long-tenured
analyst and named to the fund’s portfolio-management team in January 2013, left the firm. Two other
analysts also left that month, though Third Avenue has since brought them back as consultants.
|
Our Take:
Wadhwaney and the analysts’ departures are a big blow, and we’ve downgraded the fund to Neutral.
Vanguard Selected Value VASVX
Impact: Neutral 03-31-14
Vanguard is adding Pzena Investment Management to the roster of firms managing the fund. Pzena will
start small and gradually build up as Vanguard sends inflows the firm’s way. Barrow Hanley runs 74% of
assets and Donald Smith & Co. runs 26%.
|
Our Take: This will have little impact at first but may matter
down the road. Pzena is a deep-value firm with a strong long-term track record, but it was hit hard in 2008.
