304 / 708
14
FMI Funds Reopen
FMI
reopened
FMI Large Cap
FMIHX
and
FMI
Common Stock
FMIMX
on June
30
. The funds
have Morningstar Analyst Ratings of Gold.
Brexit Throws Funds for a Loss
Markets sold off sharply in reaction to Britain’s Euro-
pean Union referendum, but they rebounded at the
end of June. All told, the damage wasn’t that severe
from a year-to-date perspective. For the biggest
core Morningstar Categories, things are not that bad.
U.S. large-blend funds are up
2
.
1%
on average
for the year to date, intermediate-bond funds are up
a robust
4
.
9%
, U.S. allocation
50%
to
70%
equity
funds are up
3%
, and U.S. large-value funds are up
4%
. Plain old diversification into bonds and equities
has worked pretty well this time out.
To be sure, some areas are feeling more pain. Here are
the top- and bottom-performing categories:
Down markets can create buying opportunities. Even-
tually the
2008
–
09
bear market made stocks so cheap
that they were a great buy. But we didn’t get there in
a day. Given the possible harm to the global economy,
I don’t know that the markets have overreacted. So,
I’m not doing anything to my portfolio other than
Fund Manager Changes
Fund News
AMG Yacktman Focused YAFFX and AMG Yacktman YACKX
Impact: Neutral
Date: 05/01/2016
Founder Don Yacktman stepped down officially as manager on the fund. Stephen Yacktman and Jason Subotky
remain as managers.
Our Take:
Don Yacktman has been dialing back his work on the fund for a number of years,
so this was not a surprise and our ratings already reflected the fact that Stephen Yacktman and Subotky were
the driving forces at the funds. The funds retain their respective
•
and
Œ
ratings.
Fidelity Municipal Income FHIGX
Impact: Neutral
Date: 05/02/2016
Lead manager Jamie Pagliocco stepped down from the firm’s muni funds to take a position heading the firm’s
fixed-income trading group. Comanagers Mark Sommer and Kevin Ramundo, who have managed muni funds
at the firm since 2002 and 2010, respectively, were named managers on the firm’s entire suite of muni funds.
Joining the duo as a new portfolio manager is Cormac Cullen, a senior member of the firm’s muni research
team.
Our Take:
We have faith in the seasoned team that Pagliocco leaves behind and are encouraged that past
transitions in Fidelity’s muni group have been quite smooth. We are maintaining our
Œ
rating on the fund.
MFS Global Equity MWEFX
Impact: Negative Date: 2017
MFS announced that longtime lead manager David Mannheim will retire in one to two years. Ryan McAllister
will join the fund as a comanager in September 2016. Roger Morley, who has been a comanager since 2009,
will remain on board. Our Take: Mannheim has done a great job and will be missed. While Morley is a seasoned
MFS veteran who has a successful record running a fund on his own, McAllister doesn’t have as much
experience, though he has been at the firm since 2007. Also, Morley and McAllister will continue to draw on the
work of a strong group of analysts. We still have faith in the fund but have cut our rating one notch to
•
.
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 Small-Cap Stock OTCFX
Impact: Negative Date: 10/01/2016
Greg McCrickard is set to retire in October. He will be replaced by Frank Alonso, who has been an associate
portfolio manager on the fund since 2013. Alonso has been with T. Rowe Price since 2000.
Our Take:
We don’t have much of a track record to go by for Alonso, so it’s a big drop from the proven McCrickard. We
lowered our rating to
ˇ
from Silver.
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.
Inflows
Total Ret YTD %
Equity Precious Metals
95.47
Latin America Stock
26.19
Commodities Precious Metals
25.52
Utilities
19.67
Energy Limited Partnership
15.97
China Region
-4.06
Financial
-5.20
Europe Stock
-5.35
Bear Market
-6.60
Health
-9.43
Europe Stock
-11.70
Healthcare
-14.60
Data through June 30, 2016.