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Vanguard Gets a New Chairman

Plus more Putnam cuts, Gundlach fallout, and active T. Rowe Price ETFs.

Morningstar Analysts, 12/14/2009

Vanguard president and CEO F. William McNabb III will succeed chairman and former CEO John J. Brennan of the $1.3 trillion fund family on Jan. 1, 2010.

The change comes a little more than a year after McNabb formally took over the CEO post from Brennan and is the final step in a transition plan announced in February 2008, said company spokeswoman Amy Chain.

McNabb's tenure so far as president and CEO has been momentous, but often for reasons beyond his control. Since becoming president, the financial system nearly collapsed and the stock market endured one of the worst bear markets in history. Throughout the turmoil, however, Vanguard was just about the only major fund family to get positive inflows. In 2009, the family has seen inflows of more than $10 billion in eight out of the past 11 months, mostly into its bond funds.

In that time, Vanguard also accelerated its overseas expansion by launching index funds and laying plans for subadvised actively managed funds in Europe.

Vanguard selected McNabb, in part because he would provide continuity and help the firm stay the course in rough times. So far, so good.

Putnam Makes a Second Round of Layoffs
On Wednesday, Putnam Investments announced its second round of layoffs for 2009. The firm will cut 104 employees, or 5% of its total workforce. Although the majority of the layoffs will be in the firm's operations and technology groups, 16 investment team positions will be eliminated, including three portfolio managers: Brad Libby, a portfolio manager in Putnam's tax-exempt bonds group; David Gerber, manager of Putnam Global Industrial PGIAX; and Coo Way Law, comanager for Putnam Global Telecommunication PGBZX.

Libby's termination comes as a surprise, considering the strength of Putnam's municipal-bond funds, which are run by a relatively small management team. Meanwhile, Ferat Ongoren, brought on earlier this year from Citigroup C, and Putnam analyst Nathaniel Salter, both of whom previously covered industrials, will take over for Gerber. On the telecommunications fund, remaining comanager Vivek Gandhi will assume all management duties upon Law's departure.

Under new chief Bob Reynolds, who came on in mid-2008, Putnam has been making a push to restore performance after years of middling results. Several portfolio managers have joined the firm over the past 18 months, and while it's difficult to know what will happen over the long term, short-term returns have improved across most of the firm's equity funds.PAGEBREAK

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