Plus, changes at two other Morningstar Analyst Picks, 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.
Vanguard announced changes to the investment policy of its $26 billion in assets foreign large-blend index offering and Morningstar Fund Analyst Pick, Vanguard Total International Stock Index VGTSX. Until now, the fund had been structured as a fund of funds, investing in a combination of three other international index funds: Vanguard European Stock Index VEURX, Vanguard Pacific Stock Index VPACX, and Vanguard Emerging Markets Stock Index VEIEX. Now, the fund will be allowed to own European, Pacific, and emerging-markets stocks directly. The firm is initially transitioning roughly 50% of the fund's mutual fund shares to direct equities.
This modification won't alter the fund's objective of tracking a customized benchmark based on the MSCI Europe Index, MSCI Pacific Index, and MSCI Emerging Markets Index (the portfolio was divided between these three areas by 55%, 24%, and 21%, respectively, as of March 31, 2008), and the fund's 0.27% price tag won't change. Vanguard anticipates that the fund's added flexibility will improve its ability to track the markets, as the fund will now be able to invest cash flows as they're received rather than waiting until the end of the day. Other benefits include the potential for increased tax efficiency, according to the firm.
On the active-management front, the firm has reopened small-growth offering Vanguard Explorer VEXPX and Vanguard Health Care VGHCX, which are also Analyst Picks in their respective categories. When the $10 billion Explorer first closed in February 2006, its assets weighed in at $12 billion. Health Care has been closed since March 2005, when its assets approached $23 billion, and the fund is roughly $600 million larger today. Both funds, however, have seen steady outflows over the past two years or so. New purchases in Explorer require a minimum investment of $3,000 for all account types, while Health Care requires an initial commitment of at least $25,000.
Matthews Reopens Asian Funds
Matthews International Capital Management, an asset-management firm specializing in Asian equities, will reopen a pair of funds on Sept. 2, 2008: Matthews Pacific Tiger MAPTX and Matthews Asian Growth & Income MACSX. An Analyst Pick in the Pacific/Asia ex-Japan Stock category, the all-cap Pacific Tiger originally closed to investors in June 2006, and Asian Growth & Income closed back in November 2003. Although rapid inflows were the cause behind the fund closings, Matthews hopes to put new money to work in investment opportunities it is spotting among firms with strong growth prospects and attractive valuations. Pacific Tiger and Asian Growth & Income have roughly $2.7 billion and $1.9 billion in assets, respectively.
Mid-Growth Favorite Gets New Share Class
The Berwyn, Pa.-based Turner Funds is now offering an institutional share class for the $1.3 billion Turner Midcap Growth TMGFX, another Analyst Pick in the mid-cap growth category. The no-load fund was first launched in October 1996. Its investor share class requires an initial investment of $2,500 and currently costs shareholders 1.18% of assets per year, which is slightly above median for a mid-cap fund.
The new institutional share class, listed under the ticker TMGEX, requires a minimum investment of $250,000 if purchased directly from the fund company or the lower hurdle of $100,000 if bought through a mutual fund supermarket. Turner has agreed to cap the fund's annual levy at 0.93% of assets through Jan. 31, 2009, which does fall under the median for other institutional shares in the mid-cap arena.
Columbia Acorn Lowers Minimums
Columbia Wanger Asset Management, advisor to the Columbia Acorn funds, will lower the minimum investments on its trio of domestic-stock offerings: Columbia Acorn LACAX, Columbia Acorn Select LTFAX, and Columbia Acorn USA LAUAX. Investors can now gain access to the funds for a minimum of $2,500 ($1,000 for IRAs), in keeping with the typical entry points for other Columbia offerings.