14
Mairs & Power Fund Closing
Mairs & Power Small Cap
MSCFX
will close to new
investors on Sept.
30
,
2016
. With assets currently
at
$277
million, the fund still has room to grow, but
capacity is key for this concentrated, low-turnover
strategy. The firm has long held that the fund will
close by the
$500
million mark, a figure that takes
into account small caps in other strategies, including
Mairs & Power Growth
MPGFX
. (That fund is
projected to close at around
$5
billion.) This decision
to close the fund while it is still nimble will help
managers Andrew Adams and Allen Steinkopf con-
tinue to implement the strong process that contrib-
utes to the fund’s Morningstar Analyst Rating of Silver.
CalPERS Lowers Expectations
The California Public Employees’ Retirement System
has lowered its return expectations to
6
.
2%
. That is a
sensible action in light of the low bond yields out
there. It is a good reminder for the rest of us to expect
modest returns in the future and make sure our plans
will still work if they come to pass.
T. Rowe Price Health Sciences Slightly Open
T. Rowe Price Health Sciences
PRHSX
said it will
now allow new accounts via financial intermediaries
only as of Sept.
1
. The fund had previously been
closed to all new investors. We rate the fund Neutral.
Champlain Small Company Cuts Fees
Champlain announced that
Champlain Small
Company
CIPSX
will cap its expense ratio at
1
.
20%
on
its retail share class. The fee cap went into effect
on Sept.
1
. The move takes expenses down to about
even with the small-cap no-load median of
1
.
18%
.
We rate the fund Silver.
Vanguard Leads Flows Through July
Vanguard’s open-end funds have taken in net
$111
billion through July. That puts Vanguard miles ahead
of the second-place asset-gatherer,
DFA
, which
has brought in
$13
billion. DoubleLine is next with a
Fund Manager Changes
Fund News
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
•
.
Oakmark Global OAKGX
Impact: Negative Date: 09/30/2016
Oakmark International OAKIX
Rob Taylor surprised us by announcing he will retire at age 44. At Oakmark Global, David Herro will take Taylor’s
spot alongside Clyde McGregor. At Oakmark International, lead manager Herro will be the sole manager,
though he still has the help of senior analysts at the firm.
Our Take:
We are maintaining our
Œ
ratings on the
funds as we have faith in Herro. However, the change does underline the importance of succession planning
at the firm, and we’ll be watching closely as McGregor and Herro draw closer to retirement age. McGregor is 63
and Herro is 55.
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
Vanguard removed Peter Higgins from this fund, leaving David Palmer of 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.