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Janus Merging With Henderson
Janus Capital Group announced plans to merge with
U.K.-based
Henderson Group
HGG
, with the deal
expected to close in the second quarter of
2017
. It is
described as a merger of equals, with the joint
company headed by co-
CEO
s Richard Weil (of Janus)
and Andrew Formica (of Henderson). The combined
firm will be called Janus Henderson Global Investors
and have
$322
billion of assets under management.
The business rationale for the merger is clear: Both firms
have been looking to diversify their product offerings
and increase their distribution presence, though it’s un-
clear whether that will be enough to curb the asset
outflows that have plagued Janus in recent years. In
addition, economies of scale should help improve
financial results.
The benefit to fundholders is less clear. A larger firm may
attract and retain investment talent, and added scale
could drive operational efficiencies and lead to lower
expense ratios.Whether investors will reap such gains
remains to be seen.
Perkins Investment Management, which is owned
by Janus, will continue operating independently as a
subsidiary. We are monitoring parent-level develop-
ments, but the theses on individual Janus and Perkins
funds remain intact, and their Morningstar Analyst
Ratings therefore remain unchanged.
American Funds Now on NTF Platforms
American Funds has broadened its reach by making its
entire lineup available commission-free on the
brokerage platforms of Fidelity and Schwab. Retail
investors can now bypass a load by buying the F
1
shares of any American Funds offering. The minimum
initial investment on the Fidelity platform is
$2
,
500
,
and on Schwab’s platform it is
$100
. Although American
Funds’ F
1
shares charge a
25
-basis-point
12
b-
1
fee,
which goes to the respective platforms, many are still
competitively priced. For example, including its
12
b-
1
Fund Manager Changes
Fund News
Fidelity Leveraged Company Stock FLVCX
Impact: Neutral
Date: 12/31/2016
Tom Soviero will step down at the end of the year. Mark Notkin will take Soviero’s place. Notkin runs Fidelity
Capital & Income FAGIX, which has a Morningstar Analyst Rating of Silver.
Our Take:
Notkin has a strong
record in his high-yield fund, which includes an equity sleeve. Like Soviero, he has tended to be an aggressive
manager. At this fund he plans to tone down the weightings in individual stocks and tilt a bit more to growth.
We have maintained our
´
rating.
Lateef LIMAX
Impact: Negative Date: 4/1/2016
Comanager Matt Sauer left the firm in April. Comanagers Quoc Tran, James Tarkenton, and Dave Geisler
remain at the fund.
Our Take:
It’s a disappointment to lose Sauer, who came over from Ariel. However,
Tarkenton and Tran have longer track records at the fund, so it isn’t a major concern. What is a concern is
the fund’s faltering track record, which led us to rate the fund
ˇ
.
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: 9/30/2016
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.
T. Rowe Price Small-Cap Stock OTCFX
Impact: Negative Date: 10/1/2016
Greg McCrickard retired in October. He was 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: 7/10/2016
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: 7/10/2016
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.