Vanguard and Neuberger launch funds in hot categories while California's 529 plan gets a new manager.
This marks the fund's third consecutive month of outflows and brings the three-month total to an estimated $2.5 billion. With the fund down nearly 8% for the year to date through May, total assets have dropped to about $16 billion as of May from about $20 billion in February.
After three months of net redemptions, Berkowitz said during an interview with Bloomberg Television at the 2011 Morningstar Investment Conference that the fund now holds roughly 5% of its assets in cash, which would imply about $800 million in cash holdings. This is a dramatic shift. As of Feb. 28, the fund had about 25% of its then $20 billion portfolio in cash.
In an interview with Morningstar analysts this week, Berkowitz said that while he takes a cautious approach to managing liquidity and maintaining a cash buffer, he is also comfortable keeping cash below 10% for an extended period of time. This comfort with a lower cash level stems from his strong conviction in the fund's top holdings. In fact, Berkowitz also told Bloomberg that Fairholme boosted its stake in its largest holding, AIG
In his recent analysis of the fund, Morningstar editorial director Kevin McDevitt reminded new investors in Fairholme, which remains a Morningstar Fund Analyst Pick, that "this fund requires far more conviction and patience than most."
TIAA-CREF Wins California 529 Contract
TIAA-CREF won the right to manage the more than $4 billion in assets in California's direct-sold 529 college-savings plan.
The investment manager will take over for Fidelity in November and the new plan will offer lower fees. However, Morningstar analysts view several of TIAA-CREF's funds as middling versus peers.
The state chose TIAA-CREFF over Union Bank and Trust Company of Lincoln, Neb., based on a rating scale and decided that the shop offered a better distribution plan, according to a report by the ScholarShare Investment Board, which oversees California's 529 plans.