Top Value Hound Hangs Out His Shingle

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Veteran value manager Doug Eby is set to return to the mutual fund industry. Pending final approval from the board of trustees, the 17 Mile Value Fund will launch in September 2009 with Eby at the helm. Eby has formed 17 Mile Capital, a Carmel, Calif.-based adviser that is currently registering with the SEC.

Eby built a strong record as comanager of the Torray TORYX fund during a 15-year run. He parted ways amicably with Torray LLC in November 2007. He has since run a long-standing private partnership and served on the boards of directors of several firms, including Markel MKL, where he works with CIO Tom Gaynor, a top investor.

Eby says he will employ the same Buffett-esque style as in the past, focusing on superior businesses trading at fair prices. The fund can buy stocks of any size, but Eby says it will lean toward large caps. He says he will also purchase securities elsewhere in the capital structure if they present the best risk/reward profile.

Eby had great success at Torray participating in convertible-debt deals with Fairfax Financial FFH and Level 3 Communications LVLT, where he is now on the board of directors. Eby remains a long-term investor who favors a concentrated portfolio. He says the fund will hold 30 to 50 positions, and annual portfolio turnover should clock in at 20% or less.

The fund will offer retail and institutional share classes. Both will be a tad pricey until asset scale is achieved. The adviser's 1.00% management fee is reasonable, and waivers will cap the total expense ratios for a three-year period at 1.75% for the retail class and 1.40% for the institutional. Expenses can come down if assets rise.

Miller Posts Big Second Quarter
We usually don't like to focus on short-term results. But it's hard not to take notice when the fund at the top of a performance list is run by Bill Miller, the Legg Mason Value LMVTX manager who became famous in the fund industry for beating the S&P 500 for 15 consecutive years.

Miller's Legg Mason Opportunity LGOAX, a go-anywhere version of large-cap-focused Value Trust, posted a 48% return in the second quarter compared with just a 15% return for the S&P 500 Index. This result landed the fund on top of all other domestic equity funds with more than $100 million in assets for the second quarter.

This strong performance is not only due to the impressive returns of some longtime holdings such as Level 3 LVLT (up 66% for the quarter) and Sprint Nextel S (up 35%), but also the performance of new holdings such as Citigroup C (both common and preferred shares), Bank of America BAC (preferred), and Fifth Third FITB (preferred).

Miller's fund still has a lot of work left to do to recover from 2008's eye-popping 65% loss: The fund remains in the bottom decile in the mid-cap growth category over the trailing three- and five year periods as of July 1. But these results should remind investors to never count Miller out.

PIMCO Launches New Funds
PIMCO is launching PIMCO MuniGO Fund, which will focus on the highest-quality municipal bonds. MuniGO will invest in intermediate-maturity general-obligation bonds from top-rated municipal issuers, as well as prerefunded municipal bonds backed by U.S. Treasury and agency securities. The fund is managed by John Cummings, who heads PIMCO's municipal-bond trading desk.

PIMCO also announced that it will launch Emerging Markets and Infrastructure Bond Fund, which will seek to capitalize on the expected sharp increases in spending by developing nations on energy, transportation, water and waste treatment, telecommunications, public housing, and development banks. According to PIMCO, emerging-market governments around the world are targeting infrastructure investments and have more than $1 trillion of projects committed to or under way.

Artisan News
Artisan Mid Cap Value ARTQX, which reopened to new investors last October, is closing again on July 10 to new investors but will continue to accept new accounts from retirement plans.

Artisan also announced that Shayne John, comanager of Artisan Mid Cap ARTMX since August 2007, and comanager of Artisan Opportunistic Growth ARTRX since its September 2008 inception, has left the firm. There are no plans to hire a replacement. Remaining managers Andy Stephens and Jim Hamel will continue to be supported by six analysts.

Vanguard Wellington Observes Its 80th Anniversary
There are thousands of mutual funds. In addition, hundreds of new funds are launched every year and another group of hundreds is folded. There have been relatively few constants for investors over the decades but one of these has been Analyst Pick Vanguard Wellington VWELX. At the end of the second quarter, the fund celebrated its 80th anniversary.

For more than half a century, this 60/40 balanced fund has been a model for a balanced approach to investing, offering investors broad diversification and low costs. First known as Industrial and Power Securities Co., Wellington Fund was incorporated as a balanced fund of stocks, bonds, and cash on Dec. 28, 1928. The fund was renamed Wellington in 1935, the year in which it reached its $1 million milestone (it currently has around $40 billion in total net assets).

Wellington Management Company has been Vanguard Wellington Fund's advisor for 80 years. Edward P. Bousa is only the third equity manager to take the helm of the fund over the past four decades.

Investors have been well served during this fund's history and will continue to benefit from its attractive fees (it has an expense ratio of just 0.30%) and seasoned management.

Etc.
Effective July 1, Robert Galusza has been named lead portfolio manager of Fidelity Intermediate Bond FTHRX, which he will manage with co-portfolio manager Ford O'Neil. Galusza will continue to manage Fidelity Short-Term Bond FSHBX, among other funds, for which he assumed responsibility in July 2007. Galusza joined Fidelity in 1987 as a fixed-income portfolio analyst. Previously, he was an international underwriter for Chubb and Son Inc., in Washington, D.C., from 1985 to 1987, performing risk analysis on international corporations.

Ed Killen, one of five managers on all three Berwyn funds (Berwyn Fund BERWX, Berwyn Cornerstone BERCX, and Berwyn Income BERIX) and a 27-year veteran of the firm who previously took the lead role on Berwyn Income, has left the firm. He will continue to work at the firm's affiliated broker.

In response to growing demand from New York clients, American Century Investments today launched its American Century New York Tax-Free Fund this week. Its managers will invest at least 80 percent of the fund's assets in debt securities issued by cities and other municipalities that have interest payments exempt from federal and New York income taxes. The fund will be comanaged by Joe Gotelli, Steven Permut, and Alan Kruss. The team helps manage a total of seven distinct municipal-bond strategies totaling $3 billion as of May 31, 2009.