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Analyst Pick Closes

Plus, PIMCO fee cuts coming, IVA Worldwide closes, and more.

Morningstar Analysts, 01/28/2011

The $3.5 billion in assets Calamos Convertible CCVIX, an Analyst Pick and the largest fund in its category, will close Friday to all investors except those who own it through employer-sponsored retirement plans. The fund had been closed to new investors since October 2010, but Calamos said it decided to further limit its availability because of inflows and because fewer companies are issuing convertible securities, particularly the higher-quality businesses whose securities Calamos prefers. Calamos has shut the fund's doors in the past. It was closed from April 2003 through October 2008.

Managed by a seasoned team, the fund's 15-year return is top-decile, and it sports a terrific downside capture ratio--a measure of how much pain a fund feels in a downturn relative to a benchmark--versus both the S&P 500 Index and the BofA Merrill Lynch All Convertible Index.

Another Analyst Pick, Vanguard Convertible Securities VCVSX, opted to reopen in May 2010 and more recently added two managers and broadened its investment universe to include non-U.S. convertibles.

Calamos also announced that Calamos Market Neutral Income CVSIX will be closed to new investors Friday.

PIMCO to Cut Fees
PIMCO has said it expects to cut administration fees on its funds within the next six months. The announcement comes several months ahead of expected regulatory clearance of its new broker-dealer, PIMCO Investments. The firm formed the new unit to begin distributing its own funds (duties that have been handled by parent Allianz).

As Morningstar has noted, PIMCO's fees have considerable room for improvement, especially given PIMCO's enormous economies of scale. A number of the firm's noninstitutional share classes are expensive relative to peers. For example, the institutional share class of the $241 billion PIMCO Total Return PTTRX carries a 0.46% expense ratio, comfortably below the intermediate-term bond category's 0.55% median for similar peers. But the expense ratio for the fund's D share class is 0.75%, above the 0.65% median for similarly distributed funds. According to data compiled in December 2010 by Eric Jacobson, Morningstar's director of fixed-income research, more than 40% of the PIMCO funds that Morningstar covers and that receive Stewardship Grades have expense ratios higher than the norm for similar peers'.

IVA Worldwide Closes to New Investors
IVA Worldwide IVWAX is closing to new investors Feb. 18. The fund launched in September 2008 and is managed by Charles de Vaulx and Charles de Lardemelle.

IVA Worldwide has trounced its peers since inception, returning 19.2% versus the average world-allocation fund's 7.3% gain. The fund's approach is also distinctive. It strives for equitylike returns from the fixed-income portfolio, which gives it a hefty high-yield corporate-bond stake.

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