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Morningstar FundInvestor
March
2015
moved to increase the series’ international exposure.
In
2010
, the series increased its international-
stock exposure to
30%
from
20%
, and in
2013
, the
series added international bonds to the mix.
Many industry peers have also increased their inter-
national exposure over time, although Vanguard’s
recently announced changes give the firm’s offering
a decidedly more international tilt than the norm,
with the typical target-date fund having one third of
its stock sleeve and roughly
16%
of its bond
sleeve invested abroad.
Artisan Plans Emerging-Markets Fund
Artisan Partners has hired away Lewis Kaufman
from Thornburg funds. The firm plans to launch an
emerging-markets fund run by Kaufman in the
middle of
2015
.
Kaufman produced a strong record at
Thornburg
Developing World
THDAX
over a five-year
span. We had given the fund a Morningstar Analyst
Rating of Bronze but lowered it to Neutral with
Kaufman’s departure.
Paul McCulley Leaves PIMCO
On Feb.
20
,
PIMCO
announced that its chief econo-
mist, Paul McCulley, would be leaving the firm at the
end of February. McCulley had returned to
PIMCO
in
May
2014
; he’d previously spent more than a decade
at the firm before departing in
2010
. In his role as
chief economist, McCulley was not a named portfolio
manager on any funds, but he did sit on
PIMCO
’s
influential investment committee.
While Morningstar continues to keep a close eye
on manager turnover at
PIMCO
, McCulley’s departure
did not come as a surprise and does not appear to be
an indication of flagging morale at the firm. Indeed,
senior
PIMCO
leadership had indicated in recent
months that his future at the firm was uncertain given
that McCulley had reportedly returned at the personal
request of then-
CIO
Bill Gross.
The other issue posed by McCulley’s departure is
its impact on the effectiveness of the firm’s invest-
ment committee. Indeed, together with former
co-
CIO
Mohamed El-Erian and Gross, McCulley
was considered one of the firm’s top macroeconomic
thinkers. Although it will take some time for the
investment committee to prove itself, there are some
reasons for optimism. For starters, the
2014
ex-
pansion of the committee to include then-deputy
CIO
s Mark Kiesel, Dan Ivascyn, Andrew Balls,
and Mihir Worah promised to better integrate the
perspectives of portfolio managers plugged into
the firm’s bottom-up fundamental research. Mean-
while,
PIMCO
has been on an active hiring
campaign. Several recent hires, including Joachim
Fels as global economic advisor and former
presidential economic advisor Gene Sperling as a
consultant, together with the return of Nobel
laureate Michael Spence, also as a consultant,
add macroeconomic heft. Finally, the returns of
veteran manager Chris Dialynas and Marc Seidner,
CIO
for nontraditional strategies, to the firm and
the investment committee are also positive signs.
Morningstar has not made any changes to its ratings
on the
PIMCO
lineup of mutual funds as a result
of McCulley’s departure. In particular,
PIMCO Total
Return
PTTRX
retains its Bronze rating. This rating
reflects the significant and impressive resources
that
PIMCO
dedicates to this strategy and the
strength and experience of the three
PIMCO
veterans
who have taken over management of the fund.
However, the Bronze rating also reflects uncertain-
ty regarding continued outflows, the reshuffling
of management responsibilities, and ongoing changes
to the investment committee.
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