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Fund Times: Corkins to Leave Janus

Plus, new long/short funds, distributions, and more.

Morningstar Analysts, 10/22/2007

Janus Fund JANSX manager David Corkins is resigning effective Nov. 1. Corkins joined Janus as an analyst in 1995 and quickly rose up through the analyst ranks to the role of portfolio manager, managing Janus Growth & Income JAGIX and Janus Mercury (since renamed Janus Research JAMRX) before taking over the firm's flagship fund in 2006. He has done an exemplary job on those funds and has posted strong risk-adjusted results during his time at Janus.

Janus' co-CIO and manager of Janus Enterprise JAENX, Jonathan Coleman, will assume management responsibility for the Janus Fund along with Dan Riff. Riff is a comanager on Janus Adviser Long/Short JALSX and has been an analyst on the central research team. Analyst Brian Demain will become the portfolio manager of Enterprise.

Corkins' departure is a big blow to Janus. Corkins has been a champion for the analysts as well as a strong stock-picker and talented investor himself. His even-keeled nature helped him avoid the awful bear market showing that weighed heavily on most of Janus' other funds. This development follows soon after the August announcement that Janus Twenty's JAVLX longtime manager, Scott Schoelzel, will be leaving at the end of this year.

Matthews Names New CIO
Matthews International Capital has named co-CEO and one of its most experienced managers, Mark Headley, as its new chief investment officer. Headley, who will remain lead manager of Matthews Pacific Tiger MAPTX and Matthews Korea MAKOX, succeeds firm founder G. Paul Matthews in the CIO role. Matthews remains firm chairman and still manages portfolios. Headley's CIO appointment comes after the firm hired William Guilfoyle as a co-CEO to Headley.

RiverSource Launches Three New Hedge-Fund-Like Funds
RiverSource Investments has launched a series of funds that use some hedge-fund-like strategies called Advanced Alpha Strategies: RiverSource 120/20 Contrarian Equity, 130/30 U.S. Equity, and Absolute Return Currency and Income. Each is managed by a different team that already manages long-only mutual funds. Warren Spitz's value team--which has an above-average record at RiverSource Equity Value IEVAX--will manage 120/20 Contrarian Equity. The fund seeks cheap, misunderstood stocks and its team will be able to short ETFs and stocks. Another RiverSource large-cap team, led by Nick Thakore and Robert Ewing, will manage 130/30 U.S. Equity. Finally, RiverSource's global fixed-income team, led by Nic Pifer, will focus Absolute Return Currency and Income on delivering steady returns in all market conditions with a combination of currency contracts and global bonds. Each fund carries a minimum investment of $10,000 and charges a hefty 1.85% expense ratio. For more on long/short funds, read this article.PAGEBREAK

Two Delaware Funds Lose Comanagers
Liu-Er Chen and Steven Catricks have left the team at Delaware Growth Opportunities DFCIX and Delaware Trend DELTX. Lead manager Marshall Bassett will take a more active role in the tech sector due to Catricks' departure, but it remains unclear whether this will improve the fund's fortunes. Chen had amassed a solid track record during his previous job running Evergreen Health Care EHABX and Delaware hoped he would help turn around stock-picking at these funds. His departure is a setback. Given the turnover at these funds, we'd steer clear.

The Taxman Cometh
It's shaping up to be another big year for mutual fund capital gains distributions. Stock returns in 2007 are decidedly positive thus far. Through Sept. 28, international stocks gained an average of 17.3% year to date while domestic stocks gained 9.6%. This rally follows several years of strong stock market performance, driving significant embedded capital gains in equity funds. Managers are now having a difficult time keeping those gains from the taxman. Indeed, fund companies such as Pioneer and Masters' Select recently announced 2007 distribution estimates. As this early-2007 article mentions (along with a nice refresher on capital gains distributions), fund managers are having a tougher time avoiding distributions because they're running out of offsetting capital losses from the last bear market, which ended nearly five years ago.

PowerShares, State Street Launch Slew of Cheap ETFs
PowerShares and State Street Global Advisors continue to expand their massive ETF lineups. Their latest ETFs come in the fixed-income arena, where demand for ETFs is still in its infancy. On Oct. 11, PowerShares launched five new funds, including 1-30 Year Laddered Treasury PLW, Insured NY Muni PCT, Insured CA Muni PWZ, Insured National Muni PZA, and Emerging Market Sovereign Debt PCY. Expense ratios on these ETFs range from 0.25% to 0.50%.

State Street launched on Oct. 16 its own competing muni ETFs. They include SPDR Lehman NY Muni INY, SPDR Lehman CA Muni CXA, and SPDR Lehman Short-term Muni SHM. All three funds charge only 0.20%.

Aston Plans Absolute-Return, Fund of ETF Fund
In a twist on fund of funds, Aston Funds has announced plan for a similar asset-allocation fund with ETFs as the underlying securities. Its name: Aston/New Century Absolute Return ETF Fund. Aston will use quantitative algorithms to determine the underlying composition of ETFs in the fund, which it will continuously adjust to achieve the fund's absolute-return strategy. At any given time, the fund must keep at least 80% of assets in ETFs. Aston estimates a steep expense ratio of 1.67% for the offering, provided it can hold the average fee on underlying ETFs to about 0.17%.


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