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Invesco Shakes Up Domestic-Equity Growth Team

Plus, Matthews manager changes, and more.

Morningstar Analysts, 03/28/2011

Invesco has snatched a prominent Wells Fargo manager and made several other much-needed manager changes in an effort to revive its U.S. mid- and large-cap growth funds. Many of these funds, which once accounted for most of Invesco's domestic-equity assets, have been inconsistent and now represent the smallest slice of the money managed by the group.

Paul Rasplicka, who had managed Invesco Dynamics FIDYX since July 2004, has left the firm, and Brent Lium, who joined in July 2008, is no longer a listed manager but remains at Invesco on the team. Rasplicka is also off Invesco Capital Development ACDAX, which he'd run since early 1998, and Invesco Van Kampen Mid Cap Growth VGRAX, which he'd managed since June 2010.

Invesco has hired James Leach, comanager of Wells Fargo Advantage Discovery STDIX and Wells Fargo Advantage Enterprise SENTX to take over the three funds and lead the mid-cap growth team. He'll report to U.S. domestic growth equity CIO Juliet Ellis. Thomas Pence (who has been on both funds for more than a decade) and new comanager Michael Smith will run the Wells Fargo funds.

Under Rasplicka, Dynamics trailed 60% of peers and the Russell Midcap Growth Index. The fund has endured a series of manager changes over the years, struggled in the past two bear markets, and posted uninspiring long-term returns, too. Leach contributed to Wells Fargo Advantage Discovery's strong track record and will apply the same approach at Invesco. Discovery topped both its average mid-cap growth peer and the Russell Midcap Growth benchmark since he joined in mid-2007.

At Invesco's large-cap growth funds, Erik Voss, who joined Morgan Stanley's asset-management business (now part of Invesco) after managing several Seligman funds, will now oversee Invesco's large-cap strategies and also report to Juliet Ellis. In addition to running Invesco Van Kampen Capital Growth ACPAX, among others, he'll manage the $3 billion Invesco Constellation CSTGX, the firm's eighth biggest fund.

Rob Lloyd, who had run Constellation, Invesco Summit ASMMX, and several others since May 2003, is no longer with the firm. On his watch, Invesco Constellation struggled. Its 3.3% annualized gain lagged both its average large-growth peer's 5.3% annualized gain and the S&P 500 Index's 5.8% return.

Ryan Amerman, who has comanaged Invesco Summit since early 2008, will now take the lead role on that fund and several others. This will be Amerman's first time serving as a lead manager.

The changes were necessary to get Invesco's U.S. domestic growth equity lineup on more-solid footing and could improve the funds, said Morningstar analyst Ryan Leggio.

In other Invesco news, W. Lawson McWhortner, who managed Invesco Structured Core SCAUX, has left the firm. Daniel Tsai has been named to the fund, joining managers Ralph Coutant, Glen Murphy, Anthony Shufflebotham, and Anne Unflat.

Matthews Names Firm Veterans to Funds
Matthews Asia Growth and Income MACSX comanager Andrew Foster has left the firm. The fund is now run by Robert Horrocks, Ph.D., Matthews' chief investment officer (he's been on the fund since April 2009) and new manager Jesper Madsen. The latter is also lead skipper of Matthews Asia Dividend MAPIX (where he's been joined by new comanager Yu Zhang) and Matthews China Dividend MCDFX.

Vanguard Reports 11-Year High for 401(k) Balances
Participants in Vanguard-run 401(K) plans on average have emerged from the Great Recession and subsequent rebound with higher account balances, according to recent Vanguard research.

The firm reports that at the end of 2010 average 401(k) account balances for which Vanguard is the record keeper stood at $79,077, and that the median balance rose 77% from 2005 to 2010 for those who maintained a balance over that period. From December 2007, near the start of the last bear market through year-end 2010 the median rise in 401(k) account balances was 31% thanks to continued contributions, the market recovery, and nonequity investments.

Vanguard also noted that only about 2% of participants stopped contributing to their 401(k)s in 2010, and that even during 2008's downturn, only 3.1% ceased their contributions.

Western Asset's Launches New Short-Term Bond Fund
Western Asset Management filed a preliminary prospectus for Western Asset Short-Term High Yield. It will maintain an effective duration (a measure of interest-rate sensitivity) of less than one year and will invest in a wide variety of bonds, including asset-backed securities, mortgage-backed securities, corporate bonds, and government issues. The fund can invest outside the United States but will stay in developed markets. It will only invest in securities that are investment-grade at the time of purchase.

The fund will be managed by Ken Leech, Steve Walsh, Kevin Kennedy, Martin Hanley, and Christian Amantea.

Dodge & Cox has named two new independent trustees to its fund board, bringing its total to seven independent and three interested trustees. In February, Robert B. Morris III, a private investor and former managing director at Goldman Sachs, joined the board. Ann Mather will become a trustee in May. She served as chief financial officer of Pixar Studios and is also on the boards of Google GOOG and Netflix NFLX.

AllianceBernstein is no longer a subadvisor for GuideStone Funds International Equity GIEYX, and was replaced by Tradewinds Global Investors.

JP Morgan announced Aryeh Glatter, the former manager of Alliance Bernstein Balanced Shares CABNX, has joined the firm's large-cap team. He will comanage JPMorgan Large Cap Value OLVAX, JPMorgan U.S. Large Cap Value Plus JTVAX and JPMorgan Value Opportunities JVOAX along with Alan Guttman and Kelly Miller, who have been at the helm since 2004 and 2009, respectively.

JP Morgan announced it was removing a 60-day redemption fee from all of its funds. The firm says it has ample controls in place to mitigate market-timing so the fees were unnecessary.

Veracity Small Cap Value VSVIX will merge into Munder Small-Cap Value MNVAX.

Marc Murray joined the management team of Dividend Growth Trust Rising Dividend Growth ICRDX. The fund is now managed by Murray, Thomas Cameron, Jere Estes, and C. Troy Shaver.

Kinetics Tactical Paradigm KPARX will liquidate on March 23, 2011.

B shares of MTB International Equity VIEFX, MTB Income ARIBX, MTB Intermediate-Term Bond IFIBX, MTB Large Cap Growth VLGRX, MTB Large Cap Value VLCVX, MTB Mid Cap Growth MCEBX, MTB Maryland Municipal Bond AMTBX, MTB New York Municipal VNYBX, MTB Pennsylvania Municipal APTBX, MTB Strategic Allocation ABLDX, MTB Small Cap Growth ASEBX, MTB Short-Term Corporate Bond MVSBX, MTB Short Duration Government MSDGX, and MTB U.S. Government Bond AUSBX will convert to A shares on April 1, 2011.

PIMCO Emerging Markets and Infrastructure Bond PEMIX will change its name to PIMCO Emerging Markets Corporate Bond on June 8, 2011.

Nuveen Insured Municipal Bond NMBIX will close to new investors on April 27, 2011. Also, the fund will change its name to Nuveen Municipal Bond on May 31, 2011.

Nuveen California Insured Municipal Bond NCAAX will close to new investors on April 27, 2011. Also, the fund will change its name to Nuveen California Municipal Bond 2 on May 31, 2011.

Nuveen Florida Preference Municipal Bond FLOTX will close to new investors on April 27, 2011. Also, on May 31, 2011, the fund will change its name to Nuveen Municipal Bond Fund 2 and no longer be required to invest 50% of assets in Florida municipal bonds.

Scott Sedlak joined the management team of  Nuveen Real Estate Securities FREAX. The fund is now managed by Sedlak, John Wenker, and Jay Rosenberg.

Cohen & Steers Realty Income CSEIX, Cohen & Steers Dividend Value DVFAX, and Cohen & Steers Emerging Markets Real Estate APFAX will decrease the investment minimum for I shares to $100,000 from $1 million.

Century Small Cap Select CSMVX will convert investor shares into institutional shares on May 27, 2011. On March 23, 2011, investor shares of the fund will close to new investors.

Oppenheimer Balanced OPASX will merge into Oppenheimer Equity Income OAEIX on Aug. 19, 2011.

Elizabeth MacLean is no longer manager of Lord Abbett Floating Rate LFRAX. The fund is now managed by Christopher Towle.

PACE International Emerging Markets Equity PWEAX removed Gartmore Global Partners and added William Bair as a subadvisor to the fund.

Eaton Vance New Jersey Limited Maturity EXNJX, Eaton Vance Michigan Municipal Income ETMIX, and Eaton Vance Rhode Island Municipal Income ETRIX will merge into Eaton Vance National Limited Maturity EXNAX in the second quarter of 2011.

Guinness Atkinson filed to launch Guinness Atkinson RMB in May 2011. The fund will invest a significant portion of assets in Renminbi-denominated debt instruments issued by the Chinese government and corporations.

Lord Abbett filed to launch Lord Abbett Growth Leaders on June 15, 2011. The fund will invest in stocks of U.S. and multinational companies that demonstrate strong long-term growth potential. The fund can invest in all market caps.

Frontegra filed to launch Frontegra SAM Global Equity. The fund will invest at least 80% of assets in equity and equity-related securities of "sustainable issuer" companies with a high level of environmental awareness and a clearly defined social policy.

Franklin Templeton filed to launch Franklin Templeton Global Tactical Allocation. The fund seeks total return and will invest in global stocks, global bonds, commodity-linked instruments, and cash.

MassMutual filed to launch MassMutual RetireSMART Conservative, MassMutual RetireSMART Moderate, MassMutual RetireSMART Moderate Growth, and MassMutual RetireSMART Growth on June 20, 2011. The asset-allocation funds seek total return by investing in mutual funds run by MassMutual or its affiliates.

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