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Third Avenue Manager Departs

Plus, Ameriprise wins fee battle, Franklin Templeton prevails in market-timing case, and more.

Morningstar Analysts, 12/20/2010

Jeff Gary, who helped launch Third Avenue Focused Credit TFCIX in August 2009 following a six-year stint managing BlackRock High Yield Bond BHYAX, has left Third Avenue. Focused Credit's mandate is to invest in distressed securities, high-yield bonds, bank loans, and "busted" convertibles (bonds or preferred stocks whose stock prices are trading below their conversion value).

Comanager Tom LaPointe, who joined the firm with Gary and who was named to this offering in September 2010, will continue to run the fund. Third Avenue is planning for LaPointe to serve as the sole manager of the $1 billion fund. From its inception through Dec. 15, 2010, the fund has returned 16.1%, lagging the high-yield bond category's 19.1% gain.

Before he arrived at Third Avenue, LaPointe was at Columbia Management, where he comanaged several funds, including Columbia High Yield Opportunity COLHX and Columbia Intermediate Bond LIBAX from early 2003 through early 2009. Over that period, both funds edged the average returns for their respective categories. High Yield Opportunity posted a 3.0% annualized gain versus the average high-yield bond fund's 2.4% return, while Intermediate Bond returned 2.85% and the typical intermediate-term bond fund returned 2.1%.

Ameriprise Financial Wins Fee Ruling
The U.S. District Court in Minnesota has ruled in favor of Ameriprise Financial AMP in an excessive fee case brought by fund shareholders in 2004.

The court's judgment in favor of Ameriprise is the first since the Supreme Court affirmed the Gartenberg standard in Jones v. Harris Associates L.P. earlier this year. In 1982, Gartenberg established that expense ratios are reasonable if they are within the range of what might be determined in an arms-length negotiation.

The plaintiffs plan to appeal the decision.

Franklin Templeton Prevails in Market-Timing Case
Late last week, Franklin Templeton won a legal battle in Maryland's U.S. District Court. The case was related to the 2003 market-timing scandals. Franklin was one of a number of fund companies named in class-action lawsuits and was the only firm that didn't settle, although Franklin did pay $50 million in 2004 to settle market-timing allegations with the Securities and Exchange Commission.

American Century Quant Team Changes
American Century recently announced a number of changes to its quantitative equity team.

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