Plus, T. Rowe launches fund, Fidelity manager changes, and more.
Nearly midway through 2010 the average domestic-stock fund is up more than 6% through May 5, despite uncertainty about the strength of the economic recovery, the sustainability of the more-than-year-long rally, and the knock-on effects of the Greek financial bailout and spreading European-debt crisis.
Most stock funds have managed to climb this wall of worry, but some have not. Solar power and other green energy stocks have hurt socially responsible investing funds. Gabelli SRI Green SRIAX, a concentrated mid-cap blend offering, is down 4.4% versus the category's 9.2% return. Eight of its top 10 holdings, totaling almost 30% of the fund's assets, are in the red this year, and four of those are down more than 30%. Electric power and solar firms such as American Superconductor Corporation AMSC and Canadian Solar CSIQ are down 32.8% and 44.0%, respectively. Neuberger Berman Climate Change NBCAX is down 3.6%, hurt by stocks such as energy and transportation data firm Telvent GIT SA TLVT (also the top holding in Gabelli SRI Green); it is down by 31.4% in 2010. Almost half of the fund's stocks are negative for the year.
Large-growth funds, which have lagged other categories over the past decade, are trailing again this year. Prudential Jennison 20/20 Focus PTWAX is down 3.1%, while the typical large-growth fund is up 3.2% and the S&P 500 Index is up about 5%. As of the most recent publicly available portfolio, more than 25 of the fund's 40 holdings--representing almost 60% of assets--were down for the year. It still has a strong long-term record, though, gaining an annualized 6.7% since its 1998 inception, crushing the typical large-growth fund and the index.
T. Rowe to Launch a Fund for Itself
This week, T. Rowe filed to offer a fund just for other T. Rowe funds to invest in. T. Rowe Price Real Assets will launch in June and own shares of commodities, real estate, basic materials, equipment, utilities, and infrastructure firms. T. Rowe funds-of-funds manager Ned Notzon will run it.
There's a good chance that T. Rowe plans to use the new fund in its target-date retirement funds, though it has not said so. Fidelity and MFS have created similar internal funds for use in their target-date funds. If T. Rowe intends to use the new Real Assets fund to provide an inflation hedge and add an asset class that doesn't correlate with equities to its target-date mix, it might be disappointed. The products of the companies may achieve those goals, but this fund will invest in the businesses' stocks.
Fidelity Shuffles Managers
Fidelity recently announced a number of manager changes. First, Rich Fentin, who had managed Fidelity Value FDVLX since 1996, is retiring. He's being replaced by Matt Friedman, who will also take over from Fentin on Fidelity Advisor Value FAVFX. Friedman, who will comanage the funds with Fentin for a three-month transition period, will manage a portion of the funds. The remainder of assets will be managed by a team of Fidelity Select sector-fund managers: Shadman Riaz, Stephen Barwikowski, John Mirshekari, Laurie Bertner, and James Justin Bennett. They'll join as co-portfolio managers in June, and each will keep his or her portion of the fund sector-neutral.
Friedman is being replaced as manager of Fidelity Advisor Value Strategies FSOAX by Tom Soviero, who will continue to manage Fidelity Leveraged Company Stock FLVCX, Fidelity Advisor Leveraged Company Stock FLSTX, and Fidelity Convertible Securities FCVSX. He'll also continue to comanage Fidelity Advisor High Income Advantage FAHYX.
Finally, effective June 30, Jonathan S. Kasen will take over as portfolio manager of Fidelity Select Energy Service FSESX, succeeding John Dowd. Dowd will continue to manage Fidelity Select Energy FSENX and Fidelity Select Natural Resources FNARX and serve as a comanager of Fidelity Stock Selector FDSSX.PAGEBREAK