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Fund Times: World's Biggest Fund Adds New Manager

Plus, more manager shuffles, new funds, and more.

Morningstar Analysts, 11/05/2007

Capital Research & Management has named Ronald Morrow a portfolio counselor (comanager) on American Funds Growth Fund of America AGTHX. Morrow, an investing veteran of nearly 40 years, already serves as a portfolio counselor on the company's Fundamental Investors ANCFX large-blend fund. At Growth Fund of America, he'll join a team of 10 other counselors, each of whom runs an independent sleeve of assets. Capital Research won't disclose the size of each counselor's sleeve, but with Growth Fund of America now exceeding $190 billion, each counselor's sleeve is likely several billion dollars in size. In contrast, only 11 of the fund's 500 or so large-growth competitors exceed $10 billion in total assets. For more on the continued growth of Capital's individual funds, as well as the investment outfit itself, check out our American Funds Fund Family Report.

Aston Plans New 'Enhanced Equity' Fund, New International Fund
Joining the growing crowd of fund families launching strategies involving the use of derivatives, Aston will soon introduce the Aston/MJB Enhanced Equity Income Fund. It's a domestic-stock offering that sticks to stocks with market caps of more than $4 billion. A lone subadvisor, MJB Financial Advisors, will oversee assets. MJB will not only invest in domestic stocks, but will also supplement the fund's return by writing covered calls, which are call options written on the stocks the fund owns. Such strategies are complex, but they're gaining popularity as fund companies introduce long-short strategies of myriad varieties. This fund will charge 1.10% initially. For more on option strategies, see Morningstar.com's new Options homepage.

The advisor shop will also launch Aston/Barings International soon. The fund will invest at least 80% of assets in non-U.S. stocks but have broad flexibility to buy stocks in both developed and emerging markets. Barings Asset Management, of London, will subadvise the offering. The fund's initial expense ratio will be 1.25%.

Calvert Manager to Step Down at Year-End
Manager Dan Boone will hand over the reins at Calvert Social Investment Equity CSIEX at the end of 2007. A group of three comanagers who have been on the team since 2006--William Hackney, Marilyn Robinson Irvin, and Richard England--will succeed him. Boone's departure is a loss for this large-growth fund. Under his leadership the fund gained 10.7% annualized from October 1998 through October 2007, while its typical large-growth rival rose 6.1% annually during that time. Boone may retain some influence over the fund, though, as he will still manage institutional accounts with similar mandates.

Forum's Long-Short Fund Adds Subadvisors
Forum Absolute Strategies ASFAX has added subadvisors. The long-short fund with assets of nearly $500 million has asked Metropolitan West Asset Management, which already runs the fund's high-yield and investment-grade bond portfolios, to manage its distressed-debt sleeve. Absolute Strategies also added GMB Capital Management as an additional equity manager. GMB will have freedom to both buy and hold stocks or sell them short. The fund's 2% expense ratio, however, is too high.

Claymore Plans New China Small-Cap ETF
Claymore advisors is taking the single-country fund concept one step further. Its proposed Claymore/AlphaShares China Small Cap ETF targets only Chinese small caps. It will track the AlphaShares China Small Cap Index, which targets stocks with market caps between $200 million and $1.5 billion. Claymore has yet to announce the fund's expense ratio, but has said it will not charge the 0.25% 12b-1 fee allowed by its initial filing. Country-focused funds and ETFs are volatile, even those focusing on large-cap stock s. For more information and insight on China-focused funds, check out this recent article.

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