300 / 708
10
The test to be in the Fantastic
48
is strict, and the
following funds are proof. In total,
11
funds from the
2015
Fantastic list failed to make the cut this year.
How you respond to that really should come down to
why the funds fell off the list and how close they
are to getting back on it. In most cases, the funds just
fell over the line, and I wouldn’t sell based on that.
However, two had manager changes, and we down-
graded them to Morningstar Analyst Ratings of
Neutral. I would definitely review those two. I’ll start
there and then work my way through the rest.
Manager Changes
T. Rowe Price Small Cap Stock
OTCFX
manager
Greg McCrickard is stepping down on Oct.
1
,
2016
, and
will be replaced by Frank Alonso. This will mark the
end of a great run for McCrickard and this fund’s share-
holders. He has run the fund since September
1992
.
Alonso, by contrast, has just a two-year track record at
an offshore fund. He has worked as associate portfo-
lio manager on this fund, too, since
2013
. We lowered
the fund’s Analyst Rating to Neutral because Alonso’s
track record is so brief. T. Rowe Price’s manager
transitions are smooth affairs, but we don’t know if
Alonso can add value the way McCrickard has.
We downgraded
Vanguard Energy
‘s
VGENX
Analyst
Rating to Neutral from Gold when we learned
that Wellington’s Karl Bandtel would retire in June
2016
. He has been succeeded by Greg LeBlanc,
who has worked on Wellington’s energy team since
2000
. However, this is LeBlanc’s first time as lead
manager on a mutual fund. Again, I don’t see disaster
ahead, as the fund will still have low costs and the
support of Wellington.
Rising Fees
Fidelity Blue Chip Growth
’s
FBGRX
expense ratio
popped from
0
.
74%
in
2013
, to
0
.
80%
in
2014
, to
0
.
88%
in
2015
. Those are pretty big jumps, but it’s good
news/bad news. Fees rose because Fidelity has a
performance fee that charges more money when the
fund is beating its benchmark over the trailing three-
year period. As it happens, portfolio manager Sonu
Kalra posted excellent results in
2013
,
2014
, and
2015
against the Russell
1000
Growth Index, thus leading
to the fee hike. Now the bad news/good news. The
fund is about
400
basis points behind the index so
far in
2016
, so it may start to charge less before long.
Fidelity International Discovery
FIGRX
is a similar
though less dramatic story as its expense ratio
rose
5
basis points to
0
.
98%
, bouncing it from the
cheapest quintile. It had a great
2015
, which
triggered higher performance fees.
LKCM Small Cap Equity
LKSCX
is more of a bad
news/bad news story. Flagging performance led
to redemptions in
2014
and
2015
, which led to higher
expenses. Specifically, fees rose to
0
.
97%
from
0
.
94%
, which bounced the fund out of the cheapest
quintile. Its Analyst Rating is still Silver, however.
A small rise in fees also led
Oakmark Equity & Income
OAKBX
,
Primecap Odyssey Stock
POSKX
, and
Selected American
SLADX
to get ejected, though little
else changed.
Finally, three funds didn’t have rising fees but were
affected by other funds in their peer groups lowering
fees, which moved the quintile cutoff line:
Amer-
ican Funds New Economy
ANEFX
,
Invesco Equity
Income
ACEIX
, and
Mairs & Power Growth
MPGFX
.
That’s a tough way to fall out, but if you own one of
them you can rest easy that they haven’t changed
and we still rate them highly.
K
Looking at 11 That Failed to Make
the Cut
The Contrarian
|
Russel Kinnel
Our Contrarian Approach
I go against the grain to
find overlooked funds that may
be ready to rally.