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Vanguard Makes Changes at Two Key Funds

Plus, new funds from a former First Eagle team, and more.

Morningstar Analysts, 06/30/2008

Vanguard has replaced manager Dave Fassnacht of the nearly $19 billion in assets Vanguard Windsor VWNDX and almost $500 million Vanguard Capital Value VCVLX. James N. Mordy, who like Fassnacht works for subadvisor Wellington Management, will take over Windsor. (AllianceBernstein remains the other subadvisor.) Peter I. Higgins, also of Wellington, will take over Capital Value.

A Fresh Start for Former First Eagle Skippers
Fledgling asset-management firm International Value Advisers will soon roll out two inaugural mutual funds. Charles de Lardemelle and other investment personnel from First Eagle Funds advisor Arnold and S. Bleichroeder founded IVA in October 2007. The firm plans to launch a pair of international stock offerings run in a fundamental, absolute-value style echoing Benjamin Graham and Warren Buffett. IVA International will focus on stocks outside of the U.S., while IVA Worldwide will be free to roam around the globe. Both funds will also have the flexibility to invest in fixed-income securities.

De Lardemelle will colead the new funds with another former First Eagle manager, Charles de Vaulx. From early 2005 until March 2007, de Vaulx served as the sole manager of First Eagle Global SGENX, First Eagle Overseas SGOVX, and First Eagle U.S. Value FEVAX. His tenure as comanager, associate manager, or analyst on those funds with Jean-Marie Eveillard extends back nearly 20 years. For his part, de Lardemelle joined ASB as a research analyst in 1996 and led the firm's research efforts from 2005 until his September 2007 departure. He also served briefly as associate manager of the Global, Overseas, and U.S. Value funds alongside Eveillard. Although de Vaulx left ASB more than a year ago, he joined IVA as a partner and portfolio manager in May 2008.

The firm has not yet announced a launch date, nor the expected all-in cost to shareholders, although the proposed management fee is an annual 1% of assets.

Neuberger Berman Fund Bulks Up
New comanagers David Levine and Hilary Frisch have joined lead manager Bob Corman at Neuberger Berman Focus NBSSX. Since Corman took charge of Neuberger Berman's 44-person analyst pool last year, he has gradually transformed the fund into a best-ideas offering for those analysts, although he still made the final buy-sell decisions. Now, he'll share the load. Frisch was previously the lead tech-media-telecom analyst on the Fund. Levine has also managed large-value portfolios in the past, but this will be his first stint managing mutual fund assets.

Cheaper Is Better
PIMCO subadvised Managers Fremont Bond MBDFX is now a smidge cheaper. Annual fees on this intermediate-term bond fund, one of several run by Morningstar's 2007 Fixed-Income Manager of the Year Bill Gross and team at PIMCO, will be capped at 0.58% at least through March 2009. Although expenses were previously capped just a hair higher at 0.60%, this move narrows, but doesn't quite close, the gap between this fund and another cheaper Gross-led charge, Harbor Bond HABDX, which costs shareholders just 0.56% a year.

Liquidating and Lumping Together
As an increasing number of mutual fund companies scramble to roll out hedgelike long-short funds, one company will call it a day. Natixis Asset Management announced they will liquidate their $42 million long-short offering Natixis Westpeak 130/30 Growth NEFCX. Formerly known as Westpeak Capital Growth, the fund was a long-only offering subadvised by Boulder, CO.-based Westpeak Global Advisors until August 2007, when it changed its mandate to allow short selling of up to 30% of assets. Since then, the fund has shed 11.5% through June 24, more than the S&P 500 Index's 8% loss over this same stretch.

AllianceBernstein plans to consolidate a pair of international-stock funds. The $360 million in assets AllianceBernstein International Research Growth AIPAX will merge into the $3.6 billion AllianceBernstein International Growth AWPAX in the third quarter of 2008. International Research Growth shareholders shouldn't expect big changes: Six of its seven comanagers joined manager Mike Levy on International Growth in 2007, and the funds' portfolios are nearly identical. The merger will result in cost savings, though. The combined fund's A shares will cost 1.22% a year, a 0.31% drop for shareholders of the smaller fund.


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