Plus, Aberdeen's new funds, a slew of cosmetic changes, and more.
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.
Shareholders of a few funds have returned from a long Labor Day weekend to find new bosses in charge of their investments. For starters, the manager of BlackRock Pacific MDPCX, a front-load fund that sports the lowest price tag of any option in the diversified Pacific/Asia category, has been replaced by two new comanagers. Ben Moyer, who has run the fund for the last two years after joining it as a senior analyst in 1994, has handed off management duties to Nicholas Scott and Robert Weatherston. Scott first joined BlackRock in January 2007, and he helms the firm's Asian equities efforts located in Hong Kong. Prior to that, he held a similar position at London-based M&G Asset Management. Weatherston joined Merrill Lynch Investment Management (now BlackRock) in 1996, and is currently a member of BlackRock's value equity team. We don't yet know what impact this change will have on the fund, which Moyer, like his predecessors, had run in a conservative style emphasizing large, liquid blue-chips.
Lead manager Kevin McCloskey has been replaced by Walter Bean at large-value offerings Federated American Leaders FALDX and Federated Stock FSTKX. This is the second manager change for Federated American Leaders this year: McCloskey took over as lead manager Igor Golalic left in February. We wouldn't view McCloskey's departure as a loss--he delivered lackluster results at Federated Stock during his eight-year stint as lead manager--but whether the fund will improve under Bean's direction remains to be seen. Although Bean joined Federated in 2000 and has many years of investment experience at previous firms, his track record running a mutual fund goes back only as far as the launch of his other large-value charge Federated Strategic Value SVAAX in 2005, and the fund's record has been mixed so far.
Small-growth offering Pioneer Growth Opportunities PGOFX also has a new manager. Brian Stack replaced comanagers Diego Franzin and Peter Wiley, who had run the fund since 2004 and 2006, respectively. The fund has failed to keep up with its typical small-growth rival since Franzin, who heads Pioneers quant research efforts, began implementing his quantitative screens in last 2004. It remains to be seen if the fund will improve under Stack, though, who joined Pioneer this year after stints at BlackRock, MFS, and more recently Long Trail Investment Management, a firm he cofounded in 2005. So far, Wiley continues to corun his small-blend charge Pioneer Small Cap PIMCX.
Aberdeen Adds Missing Link
Since UK-based Aberdeen Asset Management gained a foothold in the U.S. retail mutual fund market with the completion of its purchase (and rebranding) of the Nationwide funds earlier this summer, the firm appeared to be a few cards short of a full deck. Of the 26 funds the firm acquired, only one, intermediate-muni fund Aberdeen Tax-Free Income NTFAX, has a fixed-income mandate. The firm plans to change that, though, with two new domestic taxable bond offerings: Aberdeen Core Income and Aberdeen Core Plus Income.PAGEBREAK
Given Aberdeen's cohesive, experienced stable of taxable fixed-income talent, we think this is a smart move. Aberdeen bought Deutsche Asset Management's core bond operations in 2005, and we've long admired the relative-value approach the team has applied at intermediate-bond funds DWS Core Fixed Income MFINX and DWS Core Plus Income SCSBX, which we'd expect the new Aberdeen offerings to replicate. In fact, we named David Baldt (former lead manager of Core Fixed Income) Fixed-Income Manager of the Year in 1997. Baldt has since left the firm, but many of his fellow team members remain onboard.
Because the Aberdeen funds will directly compete with the two DWS offerings, Aberdeen can gain the upper hand through more-competitive pricing. With expected annual fees of 0.85% on the A shares of both funds, it appears that Aberdeen Core Plus Income will offer a much better deal than its DWS rival, which costs a lofty 1.02%. On the other hand, Core Income will initially be at a slight disadvantage to its DWS counterpart, which costs 0.80%.
Heritage Asset Management plans to make minor alterations to the names and investment policies of two funds in their lineup, both of which are subadvised by Eagle Asset Management. Heritage Diversified Growth HAGAX will be called Heritage Mid Cap Growth and its stated investment policy will change to reflect management's goal of investing at least 80% of the fund's assets in companies that fall within the market-cap range of the Russell Midcap Growth Index. In addition, large-blend offering Heritage Core Equity HTCAX will change its name to Heritage Large Cap Core, adding the stipulation that at least 80% of the fund will be invested in large-cap companies. In both cases, these changes (which will go into effect on Oct. 31) shouldn't have much impact on the funds. Diversified Growth already lands in Morningstar's mid-cap growth category and Core Equity is entirely invested in large caps.