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Aston/Fairpointe Mid Cap Reopens
Aston/Fairpointe Mid Cap
CHTTX
reopened to new
investors after shareholders withdrew
$1
.
4
billion over
the
12
months through the end of February. It also
saw
$462
million go out the door in the first two months
of
2016
.
We’re maintaining our Morningstar Analyst Rating of
Silver for the fund. Although the fund’s poor
2015
performance no doubt spurred the outflows, the fund
actually is in the top decile of its peer group over the
trailing
10
- and
15
-year periods.
The fund also named a fourth portfolio manager, Brian
Washkowiak. Washkowiak joined the team in
2015
but had worked with lead manager Thyra Zerhusen from
1999
to
2002
.
Silver-rated BBH Core Select Reopens
Outflows have spurred
BBH Core Select
BBTEX
to
reopen. Investors took out
$1
.
7
billion for the trailing
12
months ended Feb.
29
,
2016
, and
$221
million
in the first two months of
2016
. The fund’s three-year
returns are bottom-quartile as its high-quality bias
and modest underweighting in healthcare held it back.
However, those same biases helped it to strong
performance in the first quarter of
2016
, and its long-
term record remains strong.
Goldfarb Steps Down Amid Valeant Debacle
Bob Goldfarb has stepped down as comanager of
Sequoia Fund
SEQUX
. We have lowered our rating of
the fund to Bronze. Please see Page
7
for more
details. This was a mutual decision, but the fund board
and others at the firm felt that decision-making had
become too centralized and others on the team needed
to have more input in the investment process. Plus,
there was a belief that senior members of the team were
ready to take on greater responsibility. (Some of them
have been with the firm since the Bill Ruane days.)
Fund Manager Changes
Fund News
American Century Growth TWCGX
Impact: Neutral
Date: 01/31/2016
Comanager Prescott LeGard was replaced by Justin Brown. Brown joined Greg Woodhams, who has been a
manager on the fund since 1997. Brown has been a comanager on American Century Fundamental Equity
AFDAX since June 2008. The large-blend fund has lagged its benchmark modestly from his start date through
January 2016.
Our Take:
This fund has lagged modestly just like American Century Fundamental Equity,
so the change doesn’t appear to be a big upgrade or downgrade.
Janus High-Yield JAHYX and Janus Flexible Bond JAFIX
Impact: Negative Date: 03/31/2016
Gibson Smith is leaving Janus. Comanager Darrell Waters will take over as lead manager.
Our Take:
We have
downgraded the funds to
ˇ
as this is a big blow to two formerly appealing funds. Smith built up Janus’
bond effort over the past 12 years and was vital to the team.
Sequoia SEQUX
Impact: Negative Date: 03/23/2016
Bob Goldfarb stepped down as comanager in the wake of the implosion of top holding Valeant Pharmaceuticals
VRX. Sequoia explained that decision-making was too centralized and didn’t give enough room for analyst input.
Our Take:
Goldfarb achieved a lot for investors even though he may be best remembered for the Valeant mess.
Moreover, the latest bad news on Valeant makes it clear that Sequoia’s thesis was wrong—up until this point
we didn’t know if Valeant’s problems were small or large. We have lowered our rating to
´
from Gold.
T. Rowe Price Health Sciences PRHSX
Impact: Negative Date: 07/01/2016
Manager Taymour Tamaddon is moving to run T. Rowe Price Institutional Large Cap Growth TRLGX. Ziad Bakri
will take his place on July 1, 2016. Bakri has been a healthcare analyst with the firm since 2011. He is
an M.D. and had previously worked as a biotech analyst for Cowen and Co.
Our Take:
This is a challenge for
T. Rowe because it follows the loss of a manager and two healthcare analysts in 2014. The firm says it
plans to hire additional analysts. This is Bakri’s first time serving as a portfolio manager.
T. Rowe Price New America Growth PRWAX
Impact: Negative Date: 04/01/2016
Dan Martino will be stepping down as portfolio manager in order to join T. Rowe’s value team. Justin White will
take over T. Rowe Price New America Growth. White has been an analyst at T. Rowe Price since 2008, covering
cable and satellite television, Internet infrastructure, and telecom.
Our Take:
It’s a surprising move, as Martino
had been managing the fund only since May 2013. You don’t often see managers go from the growth side to the
value side. We have lowered our rating to
ˇ
.
Vanguard Strategic Equity VSEQX
Impact: Neutral
Date: 01/28/2016
James Troyer has stepped down as manager. Binbin Guo was promoted to comanager, and he will run the fund
along with Michael Roach and James Stetler, who were named comanagers in 2012. Troyer will remain on
the team, however. This is Guo’s first time as a named manager, but he has been with Vanguard since 2007 and
has headed the equity research and portfolio strategy team at Vanguard’s Quantitative Equity Group since 2010.
Our Take:
Troyer is still on the team, so this doesn’t alter our view of the fund.
Virtus Emerging Markets Opportunities HEMZX
Impact: Negative Date: 05/31/2016
Virtus Foreign Opportunities JVIAX
Former Morningstar Fund Manager of the Year winner Rajiv Jain is leaving subadvisor Vontobel to set up his
own firm. Matthew Benkendorf, who has been at Vontobel for 17 years, is taking over. Benkendorf signed
a 10-year contract when Jain resigned, so we can at least be sure that he won’t be following Jain. We don’t
yet know if any of the team’s analysts will leave.
Our Take:
Losing Jain is a big blow, though Benkendorf
is experienced and a fair amount of the team will most likely remain in place. We lowered ratings for both
funds to
´
from Silver.