(PUB) Investing 2016

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11 Morningstar FundInvestor February 2016
Actively managed funds in general have seen plenty
of outflows lately, but several management teams
and firms stood out for hefty redemptions at multiple
funds. Let’s take a closer look at some of them.
AMG Yacktman YACKX, AMG Yacktman
Focused YAFFX
This pair of large-blend funds is mired in a slump,
partly because managers Don Yacktman, Stephen Yackt-
man, and Jason Subotky are more valuation-sensitive
than most peers, and growth has outperformed in
recent years. There have also been stock-specific
issues; in 2015 , for example, top holdings Procter &
Gamble PG and Twenty-First Century Fox FOXA
lost 10.0% and 28.5%, respectively. Investors haven’t
been patient: AMG Yacktman, which has a Morning-
star Analyst Rating of Gold, saw $4.3 billion in net
redemptions during the past year and now has $8.5
billion in assets. Silver-rated AMG Yacktman Focused
has taken an even bigger hit: $5.1 billion was pulled
out during the past year, and the fund has roughly the
same amount remaining in its coffers. The funds
have heavily emphasized mega-cap stocks in recent
years, thus selling shares to meet redemptions
shouldn’t be too onerous a task. Still, this trend
merits watching.
Artisan Mid Cap Value ARTQX, Artisan Small Cap
Value ARTVX, Artisan Value ARTLX
The team that runs these three funds has struggled
mightily of late, tarnishing what had previously
been stellar records. A couple of issues have hurt
performance. First, the managers tend to favor
companies with relatively healthy balance sheets and
steady revenue streams; that bias has left the funds
out of step with the market. Meanwhile, some of the
funds’ most prominent economically sensitive
holdings have been in the energy and materials sectors,
which have been hammered lately. Investors have
responded by pulling out in droves. Artisan Mid Cap
Value and Artisan Small Cap Value, which are both
closed to new investors, saw net redemptions of
$3.9 billion and $800 million during the past 12 months,
and their asset bases now stand at $6 billion and
$450 million. We lowered the Analyst Rating of Artisan
Small Cap Value to Bronze last year because of
concerns that large outflows could further hamper
performance. (Artisan Mid Cap Value is rated
Silver.) Bronze-rated Artisan Value, meanwhile, saw
$380 million in redemptions and has $1 billion in
assets. While this fund is concentrated, it tends to own
liquid large-cap stocks.
Columbia Acorn ACRNX, Columbia Acorn Interna-
tional ACINX, Columbia Acorn International
Select LAFAX , Columbia Acorn Select ACTWX,
Columbia Acorn USA AUSAX
Poor recent performance, coupled with a raft of
personnel changes, has spurred outflows at these
funds. Columbia Acorn International earns a
Silver rating, while Columbia Acorn and Columbia
Acorn International Select have Neutral ratings.
The lead manager of Columbia Acorn International,
Zach Egan, also took over flagship fund Columbia
Acorn (which invests primarily in U.S. small-growth
stocks) in mid-2015. The latter fund has struggled
and saw a massive $8.3 billion pulled out over the
trailing year; it’s now down to $6.6 billion.
While Columbia Acorn International had a poor 2015,
redemptions have been much smaller at $800 million,
and the fund has $6.3 billion in assets. Columbia
Acorn USA, which longtime skipper Rob Mohn left in
October 2015, saw $400 million in outflows and is
down to $900 million in assets. Columbia Acorn Inter-
national Select and Columbia Acorn Select are
smaller and lost about half their assets to redemptions
during the past year. Most of the funds focus on
small- and mid-cap stocks, so selling to meet redemp-
tions is a bigger problem that could harm perform-
ance as prices might be pushed lower by selling less-
liquid names. K
Contact Greg Carlson at
Outflows Dial Up Pressure on
These Funds
Red Flags | Greg Carlson
What is Red Flags?
Red Flags is designed to alert
you to funds’ hidden risks. Such
risks can take many forms,
including asset bloat, the
departure of a solid manager, or
a focus on an overhyped asset
class. Not every fund featured
in Red Flags is a sell, and in fact,
some are good long-term
holdings. But investors should
be prepared for a potentially
bumpier ride in the near future.