14
FPA Goes No Load
FPA
funds announced it is converting to no-load as
of April
1
.
It’s rare to see a fund company convert to no-load
from load, but it makes a lot of sense in this case.
FPA Crescent
FPACX
and
FPA International Value
FPIVX
were already no-load, and it’s telling that
FPA
Crescent was the one fund at the firm that was able
to draw assets. (Its great returns didn’t hurt, either.)
FPA
’s load funds have long had great performance
and virtually no inflows because the firm didn’t spend
anything on marketing. That won’t likely change. It
is unlikely it will pay the
40
basis points that no-load
No Transaction Fee supermarkets demand, either.
Thus, I’d expect you’ll have to invest directly with
FPA
to avoid any fee or you could buy through fund super-
markets but pay a fee--though that fee figures to be
much less than the typical load.
FPA
said the minimum investment on the funds will
be $
1
,
500
.
FPA Capital
FPPTX
will remain closed to new inves-
tors, but
FPA New Income
FPNIX
,
FPA Paramount
FPRAX
, and
FPA Perennial
FPPFX
are all worth a look.
Silver-rated New Income is a very conservative bond
fund that is focused on capital preservation first.
Gold-rated
FPA
Perennial and Silver-rated
FPA
Para-
mount are run by Eric Ende and Steve Geist. Ende
and Geist combine growth criteria with value criteria
to come up with unusual portfolios. They emphasize
companies with high returns on capital and clean
balance sheets.
FPA
Perennial has a U.S. focus and a $
500
million to
$
5
billion cap range, whereas Paramount has a global
mandate and larger cap range. However, the core
strategy driving both is the same. Both boast strong
returns over the managers’ tenure.
Fund Manager Changes
Fund News
Laudus Growth Investors
LGILX
Impact: Negative 12-05-12
Lead manager Lawrence Kemp has left subadvisor UBS. The reins of the fund were handed to two experi-
enced analysts: Peter Bye and Sam Console.
|
Our Take: Losing Kemp is a big blow as he built a great
record and his team had been a model of stability. UBS has seen departures in other areas, so we’re a little
wary of this fund now. Thus, we have lowered the rating to Neutral from Bronze. If UBS can keep the
rest of the team together, this fund may yet prove to be a winner, but Kemp’s departure is worrisome.
Oakmark Select
OAKLX
Impact: Neutral 01-28-13
Win Murray, Harris Associates’ director of U.S. equity research, and senior research analyst Tony Coniaris
joined Bill Nygren in running the fund.
|
Our Take: The announcement was not unexpected. On July 31, 2012,
longtime comanager Henry Berghoef, who had assisted Nygren in managing the fund since 2000, stepped
down. Harris stated at the time that it planned to appoint a successor by May 2013. It’s likely that the two
new comanagers will act primarily as assistant managers to Nygren for now. Still, Nygren emphasized
that the decision to add Murray and Coniaris was made with an eye toward the fund’s long-term steward-
ship. In a statement, he said, “While I expect to be at Oakmark for many more years, we need to think
about succession for the funds. ... Win and Tony are both younger than I am, and bringing them in as coman-
agers now will ensure investment continuity for Select far into the future.”
T. Rowe Price Health Sciences
PRHSX
Impact: Negative 02-15-13
Kris Jenner and two analysts serving this fund left T. Rowe Price to start their own firm. Analyst Taymour
Tamaddon was promoted to run the fund.
|
Our Take: This is a big blow, as Jenner built a great record and
Tamaddon is new to portfolio management. We dropped our rating to Neutral from Gold.
Vanguard Global Equity
VHGEX
Impact: Neutral 12-11-12
Lead manager Jeremy J. Hosking retired on Dec. 11, 2012. Hosking had advised the fund since its inception
in 1995. Neil M. Ostrer and William J. Arah, who also have advised the fund since inception, will remain as
portfolio managers for Marathon’s portion of the fund (44%). In addition, Vanguard fired AllianceBernstein
and handed its 6% of the fund over to Baillie Gifford, which now runs 19%.
|
Our Take: Hosking was a key
contributor, even though experienced managers are ready to fill in. Moving 6% from AllianceBernstein to
Baillie Gifford is definitely a positive; Baillie Gifford has a much better track record and greater stability.
Vanguard Health Care
VGHCX
Impact: Negative 12-31-12
Ed Owens, manager here for 28 years, retired at the end of 2012. Successor Jean Hynes has comanaged the
fund with Owens since 2007 but has worked with him for far longer. She has been on subadvisor Wellington
Management’s health-care team since 1992. Along with the rest of Wellington’s four-person team, Hynes
has helped run Hartford Healthcare
HGHAX
with success since its 2000 inception, employing a similar
approach to Owens’. Hynes has vowed to keep the strategy unchanged.
|
Our Take: It’s a blow to lose a
great investor like Owens, but having the manager and analysts who contributed to its success for years
gives us confidence in the fund.
Vanguard International Value
VTRIX
Impact: Neutral 01-14-13
Vanguard is making its second tweak to the lineup of this fund. Last August, it dumped AllianceBernstein,
and now it has fired Hansberger Global Advisors. That leaves the fund in the hands of three subadvisors:
Lazard Asset Management, Edinburgh Partners, and ARGA Investment Management. (Vanguard never
explains why it fires a subadvisor because it doesn’t want to scare off future subadvisors.)
|
Our Take:
Among the fund’s subadvisors, Hansberger had been the biggest fan of emerging markets, so the fund’s
14% emerging-markets stake may decline a bit. Hansberger’s 17% sleeve has been redistributed to
Edinburgh and Lazard. We continue to rate the fund Bronze.
