14
1 in 10 Funds Have Top Manager Investment
Our cover story features new managers who have
already ponied up large sums of their own money to
invest in their funds. So, how common is that?
Looking at all funds in the United States, just
10%
have
at least one manager over the $
1
million level.
Conversely,
49%
don’t have a manager with even $
1
in
their funds.
Five times as many Morningstar
500
funds can
boast a manager in the top investment range. Here’s
the breakdown:
All Funds
M500
More than $1M:
10%
50%
$500K–$1M:
5%
9%
$100K–$500K:
15%
17%
$50K–$100K:
5%
2%
$10K–$50K:
8%
3%
$1–$10K:
3%
1%
0:
49%
15%
NA:
4%
2%
Oppenheimer Developing Markets Closes
Oppenheimer Developing Markets
ODMAX
closed
to new investors on April
12
. The fund took in $
5
billion in
2012
, making it the most popular fund in its
category last year and securing its spot as the largest
actively managed fund in the group at $
33
billion.
Vanguard Capital Opportunity Reopens
Vanguard Capital Opportunity
VHCOX
is reopening
after being closed for nearly a decade. “After careful
consideration of the fund’s current size and cash flow,
the fund’s board of trustees determined that access
can be expanded once again to include all individual
investors,” Vanguard said in a statement.
The minimum investment is $
3
,
000
. You don’t get a
lot of chances to hire great active managers for just
0
.
48%
. See our take below.
Fund Manager Changes
Fund News
Fidelity Floating Rate High Income
FFRHX
Impact: Negative 03-31-13
Christine McConnell retired and Eric Mollenhauer took her place at the helm. Mollenhauer is an 18-year
veteran of Fidelity’s high-income group who has served a stint as Fidelity’s director of high yield and is no
newcomer to managing bank-loan portfolios. He’s managed Fidelity’s internal and institutional bank-
loan accounts since 2007 and took the lead at Fidelity Series Floating Rate High Income FFHCX when it was
launched in 2011.
|
Our Take: McConnell’s loss is a blow, though Mollenhauer is a seasoned investor.
We have placed the fund’s rating under review while we dig into the issue. At first blush, the news seems
to take the fund down a notch, though not dramatically.
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 AllianceBern-
stein 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 International Value
VTRIX
Impact: Neutral 01-14-13
Vanguard made 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.
