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Vanguard Dividend Growth Closes to New Investors
Vanguard announced on July
28
that
Vanguard
Dividend Growth
VDIGX
has closed to new investors.
Assets topped
$30
billion. It is welcome news, as
I wouldn’t want asset growth to overwhelm Welling-
ton’s ability to run the fund. It has a Morningstar
Analyst Rating of Gold, as Donald Kilbride has done a
great job.
“Vanguard is proactively taking steps to slow strong
cash flows to help ensure that the advisor’s ability to
produce competitive long-term results for investors
is not compromised,” said Vanguard
CEO
Bill McNabb.
“We have long been committed to protecting the
interests of our funds’ shareholders, and demonstrate
this conviction by closing or restricting funds to
stem further growth.”
Closing without warning is a shareholder-friendly way
to avoid a final blast of cash from investors. It is
also encouraging that Vanguard wanted to maintain
Kilbride’s influence over the whole portfolio rather
than add another subadvisor who would water down
his contribution.
Westport Funds to Merge Into Hennessy Funds
We criticized Westport funds for lacking succession
plans, and now it has announced plans to merge
its funds into
Hennessy Cornerstone Mid Cap 30
HIMDX
. The boards of
Westport
WPFRX
and
Westport Select Cap
WPSRX
approved the merger
to convert the funds into institutional shares of the
Hennessy fund. The next step is for shareholders of the
funds to vote on the proposal in September
2016
.
If approved, the merger will happen Sept.
26
,
2016
.
The fund is a
3
-star mid-blend fund charging
0
.
96%
in
expenses. It has
$1
billion in assets, and it is run
by Brian Peery and Neil Hennessy. We don’t have a
Morningstar Analyst Rating on the fund. If I owned
a Westport fund, I probably would sell and look for a
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.
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
•
.
Perkins Global Value JGVAX
Impact: Negative Date: 07/10/2016
Tadd Chessen, who joined Perkins Investment Management in April 2013 as an international analyst and was
named comanager of Perkins Global Value later that year, has left the firm. His departure comes just a year
after comanager Christian Kirtley left to rejoin ICAP, his employer prior to Perkins. Firm CIO and lead manager
Greg Kolb remains in place. Kolb has overseen this fund since 2005 when it was run out of parent company
Janus; he and the fund moved to value subsidiary Perkins in 2010. Meanwhile, George Maglares, an analyst
who joined Perkins in 2013, has been promoted to comanager.
Our Take:
Given Kolb’s history with the fund,
it retains its Morningstar Analyst Rating of
´
and Positive People rating. However, we’ll be watching
turnover on the investment team.
T. Rowe Price Health Sciences PRHSX
Impact: Negative Date: 07/01/2016
Manager Taymour Tamaddon moved to run T. Rowe Price Institutional Large Cap Growth TRLGX. Ziad Bakri took
his place on July 1, 2016. Bakri had 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.
Vanguard Capital Value VCVLX
Impact: Neutral
Date: 07/10/2016
Wellington as sole manager.
Our Take:
Higgins was responsible for the higher-risk half of the fund, so this
may moderate the fund’s profile as Palmer has more of a classic value approach. We are maintaining our
ˇ
rating.
Vanguard International Growth VWIGX
Impact: Neutral Date: 07/10/2016
Vanguard fired subadvisor M&G Investment, which was running 12% of assets. Those assets were handed to
the other two subadvisors, Baillie Gifford Overseas and Schroder Investment Management. Baillie will
now manage 60% of assets and Schroder 40%.
Our Take:
M&G’s comanager Charles Anniss had only been on
the fund since October 2014, and his predecessor was only on the fund for two years, too. It may be that
turnover prompted the change, and in any case M&G wasn’t why we had a Silver rating on the fund. We are
maintaining our
•
rating.