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14
Shakeup at Manning & Napier
Morningstar is reviewing all rated Manning
&
Napier
funds following the departure of two of the firm’s
senior investment professionals and the reorganiza-
tion of its research groups. We lowered World
Opportunities and Equity to Bronze and have the Pro-
Blend series of funds
target-date funds under review.
On March
12
,
2015
, Manning
&
Napier announced
the departures of two members
—
Jack Bauer
and Brian Gambill
—
of its
14
-member senior research
group. Bauer, who is retiring after more than two
decades with the firm, had been a member of the
SRG
since
1992
and led the firm’s fixed-income
portfolio group. Gambill joined the
SRG
in
2002
and
ran the firm’s capital goods
&
materials sector
group. That group covers energy stocks, which was
a notable source of underperformance in
2014
and over the five-year period through December
2014
.
The tenure and stability of the
SRG
have been two
of the firm’s strong points. The most recent departure
prior to these two occurred in
2001
when Ebrahim
Busheri left, though he rejoined the firm in
2011
.
Concurrent with these two departures, Manning
&
Napier reorganized its research groups. Busheri has
assumed the role as director of investments. That
role will encompass the responsibilities previously
held by Jeff Coons and Jeff Herrmann as co-directors
of research. Coons remains president of the firm,
and Herrmann will help fill the void left by Gambill’s
exit from the capital goods
&
materials sector group.
Busheri, Coons, and Herrmann will remain on the
SRG
, and that group has been cut to five members
from
14
. (Marc Tommasi and Christian Andreach are
the other two members.) Most members of the
SRG
were previously collectively named on the firm’s flag-
ship funds, and the changes in the group’s structure
will likely entail changes to those funds’ rosters.
Fund Manager Changes
Fund News
AMG GW&K Core Bond MBDFX
Impact:
Neutral
Date: 02-28-15
AMG fired PIMCO and replaced it with GW&K. It also renamed the fund from its former name AMG Managers
Total Return Bond Fund. The fund had been a near clone of PIMCO Total Return PTTRX but will now be run
by institutional money manager GW&K. Mary Kane will serve as manager. Kane has a brief two-year tenure at
AMG GW&K Enhanced Core Bond Investor MFDAX, which has performed well during her tenure.
|
Our
Take: The fallout from Bill Gross’ departure keeps coming. GW&K has a good reputation, but we don’t cover
any of its funds yet.
Buffalo Mid Cap BUFMX
Impact: Negative Date: 01-05-15
Kent Gasaway left the fund to focus on Buffalo Small Cap BUFSX, and Dave Carlsen replaced him as
comanager. Bob Male remains as comanager.
|
Our Take: This is the second round of manager changes
at Buffalo in recent years, and it comes amid slumping performance. In addition, Carlsen doesn’t have a long
and meaningful track record. Thus, we have downgraded the fund to Neutral from Bronze.
Perkins Mid Cap Value JMCVX
Impact: Negative
Date: 04-05-15
Comanager Jeff Kautz resigned. Kevin Preloger, who was named comanager in April 2013, remains and
will be joined by Justin Tugman of Perkins Small Cap Value JSCVX.
|
Our Take: The fund has been
trying to get back on track after several years of underwhelming performance. The fact that its five-
year results aren’t up to par isn’t surprising or disappointing given the fund’s relatively conservative process,
but weak stock-picking is more cause for concern. The loss of a long-tenured manager is disappointing
but not insurmountable. Risk-adjusted results since inception remain strong. However, the departure, coupled
with the fund’s stock-picking woes, is enough to move this fund’s Morningstar Analyst Rating to Bronze
from Silver.
Royce Low Priced Stock RYLPX and Royce Premier RYPRX
Impact: Neutral
Date: 11-10-14
Whitney George has left Royce after being mired in a severe slump. At Royce Low Priced Stock, Jim Stoeffel
is now the lead manager. He had been an assistant manager since 2013 and worked for Royce since 2009. At
Royce Premier, Chuck Royce shifts from comanager to sole lead manager.
|
Our Take: Stoeffel produced
decent results during a previous stint at CRM Small Cap Value CRISX, so there are some positives here, but he
doesn’t have George’s track record. The firm says that Royce Low Priced Stock will return to its roots with
lower-priced stocks and will shed the materials stocks that have killed performance. We lowered that fund to
Neutral. Premier’s change is less dramatic. George’s half of the portfolio will go to Royce, who was already
running the other half. We rate Royce Premier Silver.
T. Rowe Price International Stock PRITX
Impact: Negative Date: 04-01-15
Bob Smith stepped down this year; Richard Clattenburg took his place. Clattenburg has been with T. Rowe
Price since 2005, serving as an analyst and associate portfolio manager.
|
Our Take: Clattenburg lacks a record,
so it’s a big drop from the seasoned Smith. We’ve lowered our rating to Neutral.
Vanguard Convertible Securities VCVSX
Impact: Negative Date: 06-01-15
Veteran manager Larry Keele is stepping down and being replaced by Stuart Spangler.
|
Our Take: Oaktree is
an excellent firm so we remain confident in the fund, but it’s still a blow to lose Keele, who has built a great
record here. We lowered our rating to Bronze.
Vanguard Intermediate-Term Treasury VFITX,
Impact: Neutral
Date: 01-02-15
Vanguard Long-Term Treasury VUSTX,
Vanguard Short-Term Treasury VFISX
Gemma Wright-Casparius has replaced David Glocke as manager of the three funds. Wright-Casparius is
head of Vanguard’s TIPS and Treasuries group and manager of Vanguard Inflation-Protected Securities VIPSX
fund.
|
Our Take: The fund remains in good hands. We have affirmed our Silver rating on the funds.