15
Morningstar FundInvestor
August 2
013
tection. We think they are less risky, and since we
have a bunch of money sitting in cash today, di-
versifying some of that into
TIPS
make sense, even
though we really don’t love them at these yields.”
Artisan Small Cap Closes
Silver-rated
Artisan Small Cap
ARTSX
closed to
most new investors on Aug.
2
,
2013
. The $
1
.
2
billion
fund had more than $
220
million in net inflows in the
six months from October
2012
through March
2013
,
according to Morningstar data. Factoring in assets in
separate accounts, this small-cap strategy soaked
up roughly $
1
.
9
billion in assets as of June
2013
.
Stephen Yacktman Named CIO
Don Yacktman announced that his son Stephen Yack-
tman had taken over as sole
CIO
of Yacktman Asset
Management, the subadvisor for
Yacktman
YACKX
and
Yacktman Focused
YAFFX
. Don and Stephen
had shared that title during the past seven years.
Fidelity to Close Fidelity Ultra-Short Bond
Fidelity will close
Fidelity Ultra-Short Bond
FUSFX
to most new investors on Aug.
2
,
2013
. The fund
suffered extremely poor performance from
2007
through
2009
, and its asset base diminished consider-
ably. The fund currently holds $
397
million in assets
under management.
Vanguard Suffers First Firmwide Outflow
Since 1994
Investors redeemed $
432
million from Vanguard in
June, including mutual funds, exchange-traded funds,
and money market funds. The outflows at Vanguard
were driven by a $
7
.
4
billion outflow from the firm’s
taxable-bond funds and a $
2
.
5
billion outflow from
municipal-bond funds. Industrywide, those two cate-
gory groups had outflows of $
68
billion. Despite
the outflows, the firm still managed to gain market
share on the month as industry assets declined at
a faster rate. While Vanguard’s flows were not un-
usual given the acute reaction to the Fed’s talk of
tapering its asset purchase program, the outflow was
the first firmwide outflow since December
1994
.
Excluding money market funds, Vanguard’s outflow
was $
5
.
5
billion, while
PIMCO
led all firms with a
$
14
.
3
billion outflow.
Investors Fled PIMCO Total Return, Too
PIMCO Total Return
PTTRX
also saw outflows.
Specifically, it shed about $
10
billion in June
and $
7
billion in July. These are big figures but in
percentage terms not so great given the fund’s
$
262
billion asset base.
Investors have been redeeming many intermediate-
bond funds and in this case they are no doubt
responding to
PIMCO
Total Return’s poor performance
this year. See Income Strategist for more on this fund.
Flows Moderate in July
Preliminary indications are that the big exodus from
funds in June did not carry over to July. Weekly
flow data in July show investors returning to equity
funds and taxable-bond funds. However, flows out
of municipal-bond funds remain heavy in the wake of
Detroit’s bankruptcy filing.
Fairholme Suing U.S. Over Fannie,
Freddie Shares
Bruce Berkowitz’s
Fairholme
FAIRX
is suing the U.S.
government for the right to receive dividends from
its preferred stock in Fannie Mae and Freddie Mac.
Fairholme disclosed a $
2
.
4
billion redemption value
stake in the two enterprises’ preferred stock in June.
Fairholme’s June
3
statement on the stake included
the claim that “equitable treatment of taxpaying share-
holders, including community banks, insurance
companies, and mutual funds holding Preferred Stock,
must be restored with dividends reinstated.”
Fairholme’s suits, which are being filed both in the
U.S. Court of Claims and the U.S. District Court for
the District of Columbia, allege that the government
has broken from the original terms of its
2008
emer-
gency investments in Fannie Mae and Freddie Mac,
unlawfully hurting preferred shareholders. Berkowitz
contends that the firms, now profitable and repaying
the government, are also in a position to begin paying
dividends on preferred stock. “As solvent, highly
profitable companies, Fannie and Freddie should
honor all outstanding obligations to their investors,”
Berkowitz said in a July
9
news release.
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