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File-And-Suspend Social Security Option Eliminated
Congress voted to change Social Security rules that had
allowed people to file for but then suspend benefits
in order to boost their benefits. Planning expert Michael
Kitces explains:
“By extending the rules for deemed application, it will no
longer be possible to file a restricted application
for just spousal benefits. And with an extension of the
‘suspension’ rules that stipulate suspending an indi-
vidual’s benefits will also suspend any benefits to other
people based on the same earnings record, Congress
has killed off the various ‘File and Suspend’ strategies
to allow spousal and dependent benefits to be paid
while still earning delayed retirement credits.
“Perhaps most notable for the new Social Security
crackdown, though, is the effective date for the rules.
While the new limits to restricted application will
not apply to anyone who is already age
62
or older in
2015
, the new crackdown will kick in six months
from now (thanks to a recent amendment to the original
legislation), grandfathering anyone currently going
through file-and-suspend but limiting anyone who tries
to suspend benefits thereafter. Beyond that point,
anyone who suspends will find that no benefits will
be payable until the individual who suspended
chooses to reinstate benefits (either to restart them
now, or finish waiting until age
70
).”
SEC Investigates Murky Fee Issue
The
SEC
has been shining a light on a dark corner of
mutual fund expenses--sub-transfer-agency fees.
Recently, the
SEC
sanctioned one firm, First Eagle, for
unlawfully accounting for what, in fact, were sales
and marketing expenses as sub-transfer-agency fees.
If reports are to be believed, the
SEC
has had
other firms in its sights as part of its Distribution-in-
Guise Initiative.
While the First Eagle case hasn’t garnered a ton of
attention, it’s important nonetheless. First, this is a
Fund Manager Changes
Fund News
Calamos Growth CVGRX
Change: Negative Date: 09/01/2015
Co-CIO Gary Black left Calamos three years after joining the firm. The situation is similar to that of Janus,
where Black arrived to fix a problem firm but left after a few years as both sides were ready to move on. Black
was one of five comanagers listed on the fund. Calamos added Michael Roesler to replace Black as the fifth
manager.
Our Take:
It isn’t pretty. Performance was mediocre over Black’s tenure, and his departure leaves a
void in upper management.
Fidelity Small Cap Discovery FSCRX
Change: Neutral
Date: 03/14/2016
Chuck Myers will take a six-month leave of absence. Derek Jansen will fill in while he is gone. Jansen runs
Fidelity Small Cap Value
FCPVX, where he worked with Myers before replacing him there.
Our Take:
For a low-turnover fund, we don’t see much risk in Myers taking six months off. We will watch closely, though,
to be sure he comes back on time. Usually managers come back after leaves of absence and pick up right
where they left off, but occasionally they decide not to come back.
MainStay ICAP International ICEUX
Change: Negative Date: 09/30/2016
Lead manager Jerry Senser will retire at the end of September 2016. The firm named Tom Cole co-chief
investment officer and said Matthew Swanson will step down to focus on U.S. strategies.
Our Take:
Senser
has led ICAP since Rob Lyon’s death in 2007. We’ve lowered our rating to
ˇ
from
´
.
Matthews Pacific Tiger MAPTX
Change: Negative Date: 09/09/2015
Comanager In-Bok Song left to work as an analyst at Thornburg. This follows Richard Gao’s departure in July
2015.
Our Take:
Although Song was not the lead, her departure along with Gao’s led us to lower the fund’s
rating to
•
. As the rating implies, we still think the fund is in good hands. Sharat Shroff has experience
and a track record at Matthews that inspires confidence. The fund recently reopened because of outflows
seen at most Asia funds.
Oppenheimer Developing Markets ODMAX
Change: Positive Date: 09/09/2015
John Lech was added as a comanager for Justin Leverenz. Lech has been with Oppenheimer since 2008.
Our
Take:
Leverenz is still very much in charge, but Oppenheimer is trying to make supporting managers and
possible successors more visible to quell concerns about key-man risk. We’ll be interested to see how much
authority Lech has over the portfolio, but in the meantime we are maintaining our
•
rating.
USAA International USIFX Change:
Change: Neutral
Date: 08/28/2015
USAA has hired Lazard Asset Management and Wellington Management and given them 15% each to manage.
MFS managers Marcus Smith and Daniel Ling will still guide 70% of the fund.
Our Take:
This is only a slight
negative as Wellington and Lazard are solid managers. MFS has done such a good job that we’d rather not see
them diluted, but they are still having quite an impact at 70%. We are maintaining our
´
rating.
Vanguard Windsor II VWNFX
Change: Negative Date: 01/01/2016
Longtime lead manager James Barrow will retire. Comanagers Jeff Fahrenbruch and David Ganucheau will replace
him. The two have been comanagers since 2013, and eight years ago Vanguard had said they would eventually
succeed Barrow. Barrow will continue to manage
Vanguard Selected Value
VASVX.
Our Take
: We knew Barrow
would retire in the relatively near future, so this is not a surprise. Still, Barrow’s outstanding record makes this
a real loss. His replacements are seasoned but do not have long track records of their own. We have lowered our
rating to
´
from
•
.
Wasatch Small Cap Growth WAAEX
Change: Neutral
Date: 02/01/2016
Jeff Cardon will step down as lead portfolio manager of this fund and CEO of Wasatch Advisors. He will
remain a comanager on the fund. J.B. Taylor will take over Cardon’s role as both CEO and lead manager
on the fund at that time.
Our Take:
This looks like a gradual evolution. We are maintaining our
Œ
rating
but will watch closely to see how involved Cardon is. On the plus side, Taylor has a strong record, too.