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Tough Times Force Wasatch Layoffs

Plus, RiverSource reshuffling and more.

Morningstar Analysts, 11/03/2008

Morningstar's fund analysts cover 2,000 mutual funds. Their full analyst reports, including Stewardship Grades, are available in Morningstar Principia Mutual Funds Advanced and Morningstar Advisor Workstation Office Edition.

Wasatch Advisors announced on Oct. 24 the departure of two portfolio managers. The firm's assets under management have been cut in half over the past 18 months as the market has unraveled, forcing personnel cutbacks. Laura Hoffman, comanager of struggling Wasatch International Growth WAIGX since 2005, has departed, leaving Roger Edgley as sole manager of the $195 million fund. The foreign small-mid growth fund has fallen hard in the market downturn, losing nearly 60% in the year to date through Oct. 29, and its long-term record also trails many of its peers. Edgley has potential to turn the fund around, though. His consistent approach has produced a few good years of performance at his other charge, Wasatch International Opportunities WAIOX, and he had a solid record as manager of the Columbia Acorn funds.

Neal Dihora, comanager of the $144 million Wasatch Ultra Growth WAMCX since January 2006, has also left. Ajay Krishnan, who started at Wasatch as an analyst in 1994 and became comanager of this fund in 2000, will assume full responsibility. The volatile fund has been one of the worst performers in the small-growth category this year, but it could serve investors well over the long haul.

The departures shouldn't cause too much disruption at these funds, as the incumbent managers have already been on board for awhile. However, cutbacks could become an alarming industrywide problem as redemptions reach an all-time high and fund companies are forced to scale back their resources.

RiverSource's Changing of the Guard
RiverSource has announced new management for six funds previously run by Nick Thakore and Robert Ewing, who recently left for Putnam. To fill their shoes, RiverSource will tap into new manager talent from its acquisition of J. & W. Seligman & Co. in July 2008. Erik Voss, who currently runs Seligman Capital SCFIX, Seligman Common Stock SCSFX, Seligman Growth SGRFX, and Seligman Growth & Income SINFX, will take over RiverSource Growth INIDX. Voss has been at Seligman only since 2006 and does not yet have a proven record at his charges. However, he successfully ran Wells Fargo Advantage Endeavor Select STAEX for five years.

Richard Parower will take control of RiverSource Global Technology AXIAX. Since 2002, Parower has amassed a decent track record as lead manager of Seligman Global Tech SHGTX, and he also assists at the fund's sibling, Seligman Communications & Information SLMCX. Both funds have been near the top of the technology category over the last few years and have outperformed RiverSource Global Technology.

RiverSource's Contrarian Equity Team will assume responsibility for RiverSource Large Cap Value ALVAX and the equity portion of RiverSource Balanced INMUX. (The fixed-income management will remain unchanged.) The experienced team, headed up by Warren Spitz since 2000, takes a deep-value approach and has had moderate success with some of its charges, including RiverSource Diversified Equity Income INDZX and RiverSource Mid-Cap Value AMVAX.

The Disciplined Equity & Asset Allocation team, led by Dimitris Bertsimas, will take over RiverSource Large Cap Equity ALEAX. The team currently runs an assortment of conservative allocation and target-date funds that have been around for just over two years, as well as RiverSource Disciplined Equity AQEAX, a quant-based large-blend fund that has been in the middle of the pack since its inception in 2003.

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