257 / 772
15
Morningstar FundInvestor
June 2015
month after Gross’ departure. There are no signs that
flows have had an impact on performance. The
fund has large sums in very liquid securities, which
enables management to handle outflows effectively.
Wells Fargo to Streamline Share Classes
The board of the Wells Fargo Advantage Funds
announced that it will convert all of the mostly
higher-priced Investor share classes of its funds to
lower-cost A shares.
The move is a positive one for investors. Eliminating
46
funds’ Investor share classes will lower fund-
holder costs by
1
–
6
basis points, depending on the
fund. While the Wells Fargo Advantage funds’
expense ratios have been average overall, fully one
third of the firm’s share classes—including the
Investor share classes of many funds—have
Morningstar Fee Levels of Above Average or High.
According to Morningstar data,
11
.
7%
of all of
Wells Fargo Advantage funds’ assets currently are
housed in Investor share classes.
For example,
Wells Fargo Advantage Discovery
WFDAX
, which has a Morningstar Analyst Rating
of Bronze, charges
1
.
22%
for its A shares, garnering a
Below Average fee level. The Investor class shares
of the same fund, meanwhile, cost
1
.
28%
, which is
high enough for the price tag to be classified as
Above Average.
Elsewhere, the A shares of Silver-rated
Wells Fargo
Advantage Municipal Bond
WMFAX
cost
0
.
76%
and rank as Below Average, while that fund’s Investor
shares cost just
3
basis points more but have a High
fee level. The share-class conversion is scheduled to
take place in late October.
T. Rowe CEO to Step Down
T. Rowe Price
CEO
, president, and chair of the firm’s
management committee James A.C. Kennedy
will step down from those roles as of Dec.
31
,
2015
.
Kennedy,
61
, will officially retire from the firm in
April
2016
after a
38
-year career at T. Rowe. William
Stromberg, currently head of global equity and
global equity research, will succeed Kennedy.
Stromberg,
55
, is a logical successor. Like Kennedy,
he’s had a long career at T. Rowe Price and came
up through the investment division, starting as an
equity analyst in
1987
. He managed
T. Rowe Price
Dividend Growth
PRDGX
from the end of
1992
through March
2000
and later served as director of
equity research, director of global equity research,
director of equity, and finally head of global equity in
2009
. Stromberg joined T. Rowe’s management
committee in
2007
, the same year that Kennedy was
named
CEO
and president.
Stromberg’s time on the management committee,
which oversees the firm’s strategic direction,
makes him well-suited for the
CEO
role, as he’s been
involved in high-level company decisions for
several years. It’s also encouraging that someone
with investing roots is in the
CEO
role, which
should help the firm carry forward its long-standing
tradition of looking out for investors’ interests.
One of his challenges will be slowing the rate of
unexpected portfolio manager departures, which have
occurred at a greater pace during the past two years
than is typical for the firm.
The firm announced a few other management
changes. Eric Veiel will become head of U.S. equity
and will join the management committee as of
Jan.
1
,
2016
, a role previously held by John Linehan,
who’s preparing to become manager of
T. Rowe
Price Equity Income
PRFDX
later this year. Veiel
has been at T. Rowe for
10
years and has held various
roles, including analyst, manager of
T. Rowe Price
Financial Services
PRISX
, and most recently
director of equity research North America. Technology
analyst Tom Watson will fill Veiel’s role as director
of equity research North America, joining Jason Polun.
Despite the changes, it should be business as
usual at T. Rowe Price. The firm has historically
handled leadership transitions well, and the board
had been discussing Kennedy’s successor for
18
months. Meanwhile, the management committee
remains long-tenured.
K