Plus, PIMCO shutters three funds while T. Rowe creates a new one.
Another solid manager is leaving bond-fund giant PIMCO, and that has set in motion a string of changes within the company's fund management and trading ranks.
Gang Hu, who helped Mihir Worah manage the highly successful PIMCO Real Return PRRIX, will be leaving PIMCO on June 3 after having proved himself a skilled member of the Real Return team. The team, which trades and manages all of PIMCO's Treasury Inflation-Protected Securities related portfolio strategies, will pull Rahul Seksaria from the Treasury group to take Hu's place. Seksaria was likely chosen for his varied expertise, including having done trading for the Real Return team. While Hu's able replacement is proof of PIMCO's deep and talented bench, we would add that continued exits could start to produce some erosion of cultural strength.
For now, PIMCO can handle the current domino effect without wide-scale disruption of its portfolio managers. Chris Kemp will be leaving the short-term bond group for the Treasury team and will be assuming some of Seksaria's duties. Andrew Wittkop is leaving the Treasury group to become a senior member on the short-term team. Brendon Shvetz is moving from the short-term team to the global group and will focus on currency trading.
And There Is More Change at PIMCO
In further news, PIMCO is shuttering three small funds this summer.
PIMCO Fundamental IndexPLUS Fund PFPIX, with $179.8 million in assets, is being liquidated. The fund sought to exceed the returns of the FTSE RAFI 1000 index using derivatives. The PIMCO MuniGO APNAX just launched in 2009 has less than $40 million under management. It focused on intermediate-maturity general-obligation bonds from municipal issuers and pre-refunded municipal bonds backed by the U.S. Treasury and agency securities. The PIMCO International StocksPlus TR Str PISIX has $192.8 million under management. Share sales for all three funds will cease June 13. The liquidation date is set for July 29.
Elsewhere, PIMCO Developing Local Markets PLMDX will be renamed PIMCO Emerging Markets Currency to reflect a slight strategy shift. The fund holds positions in short maturity local bonds and currency derivatives. Managers now will be given greater leeway in classifying countries as emerging markets. Previously, the fund defined a "developing market" as any non-U.S. country aside from those classified by the World Bank as high-income Organization for Economic Cooperation and Development, or OECD, economies for the past five years. The fund managers will now have "broad discretion" to identify emerging markets. The changes will take place by Aug. 16.
T. Rowe Price to Open New Fund
T. Rowe Price filed to launch T. Rowe Price Emerging Markets Local Currency Bond on May 26. The fund will invest in bonds denominated in emerging-markets currencies or derivatives that provide emerging-markets bond exposure. In the last few years, several other shops have launched unhedged local-currency funds as some investors look to cut U.S. dollar exposure. Of the 20 emerging-markets local-currency funds, 14 have been opened in the last year.
Andrew Keirle and Christopher Rothery will manage the T. Rowe fund. Rothery has been with the company since 1994, and Keirle joined T. Rowe in 2005. The London-based pair also has been managing a similar strategy for institutional investors in the T. Rowe Price Funds SICAV--Emerging Local Markets Bond Fund since 2007. Now the strategy will be available to retail investors, said T. Rowe spokeswoman, Heather McDonold.
New World View for FPA Paramount
FPA Paramount FPRAX has a new global mandate and expects to invest more than half of its assets in non-U.S. firms. Previously, the fund limited its foreign stake to 35%. Foreshadowing this move, the fund has been increasing its stakes in U.S. companies with large foreign components. The switch should broaden the fund's investable universe and provide a currency hedge against the weakening dollar, according to a recent filing. The transition will take more than a year as the managers attempt to maintain the fund's historically low turnover rate. Other FPA funds have become more globally focused but haven't made as big of a move.
Florida Municipal Bonds
Managers of Vanguard Florida Long-Term Tax-Exempt VFLTX will now be able to invest up to half of the fund's assets in out-of-state municipal bonds. The change was a long time coming, considering it was back in 2007 when Florida made a tax code change that eliminated the benefit of holding state-only municipal bonds. We wonder why Vanguard has been slow to make this change, considering Florida residents have had no financial incentive to own this fund over a more broadly diversified national fund for years. Of course, it could be that Vanguard has opted not to shutter or merge away the fund if there is a chance that Florida will change back its tax code. Stay tuned.
Andrew Swan is no longer a manager on JPMorgan Asia Equity JAEAX. The fund is now managed by Joshua Tay, Pauline Ng, and new manager Patrick Chiu.
Roger D. Edgely and JB Taylor will replace Robert Gardiner and Blake Walker as managers of the Wasatch Global Opportunities WAGOX.
Laura Geritz will replace Walker on the Wasatch International Opportunities WAIOX. Both changes are effective June 30.
Nidhi Mahurkar is no longer a manager on Forward Emerging Markets FEMMX. She will be replaced by Peter Jarvis.
Matthew Wright no longer managers First Investors Blue Chip FIBCX. The fund is now managed by Edwin Miska and Sean Reidy.
Kevin Yousif is no longer a manager on Calvert Social Index CSXAX. The fund is now managed by Eric Lessnau and David Jones.
Kai Kong Chay joined the management team of John Hancock Greater China Opportunities JCOAX. The fund is now managed by Chay, Terrance Pak Hing Chum, and Ronald Chan.
RidgeWorth Large Cap Quantitative Equity SQEAX will merge into RidgeWorth Large Cap Core Growth Stock CFVIX on July 15.
Michael Fraikin is no longer a manager of Invesco Global Equity GTNDX. The fund is now managed by Uwe Draeger, Karl-Georg Bayer, Jens Langewand, and new managers Ralph Coutant and Andrew Waisburd.
Anthony Shufflebotham is no longer a manager on Invesco Structured Core SCAUX. The fund is now managed by Ralph Coutant, Glenn Murphy, Anne Unflat, and new managers Daniel Tsai and Andrew Waisburd.
Old Mutual Strategic Small Companies OSSAX changed its name to Old Mutual Copper Rock International Small Cap. The fund also changed its strategy from a domestic small-cap strategy to an international small-cap strategy.
Touchstone Total Return Bond TCPAX added EARNEST Partners as a subadvisor.
David Kruth is no longer a manager on Alpine Cyclical Advantage Property EUEYX. The fund is now managed by Samuel Lieber.
Mutual fund analyst Kailin Liu contributed to this report.