Plus, new offerings from Buffalo Funds and Thornburg, and more.
Fidelity Investments recently confirmed its plans to create two separate fund boards. One of the boards will oversee Fidelity's equity and high-yield bond funds, and the other will be responsible for its fixed-income, money market, and asset-allocation offerings.
Fidelity wants to make the change because it plans to further expand its product lineup in the next five to 10 years. The fund shop has always been known for its asset-gathering imperative. In the past decade alone, Fidelity has roughly doubled the number of funds the board oversees to 369. Fidelity spokeswoman Anne Crowley said the growing complexity of financial markets, such as the increased use of derivatives in the fixed-income space requires additional board oversight.
It is unknown at this point how the current board will be affected and if CEO Ned Johnson will continue to serve as chairman of one of the new boards. More details will emerge when proxy materials are sent to shareholders early next year. Crowley said Fidelity should complete the move next summer.
The creation of a new board is a positive development. A single-board structure encourages trustees to view the firm's funds as a family unit, as opposed to separate entities that are supposed to act in their investors' best interests. Further, since the first version of Morningstar's Stewardship Grades was launched in 2004, we have questioned the Fidelity board's ability to oversee the shop's entire lineup. Even with its 10 different committees and frequent meetings, more than 300 funds across a wide range of asset classes is a heavy load. However, Fidelity has always vehemently denied that its board was overworked.
Buffalo Funds Launches International Fund
Buffalo Funds recently added Buffalo International to its lineup. The fund invests in companies that are based or traded outside of the United States or derive at least 50% of their revenues from abroad. Up to 30% of fund assets may be invested in emerging markets. Portfolio manager Bill Kornitzer applies the same price-conscious approach applied at other Buffalo growth funds. Kornitzer and his analysts attempt to identify financially healthy companies with long-term growth potential that are trading at reasonable prices. The fund's expense ratio is 1.21%, which falls in the middle quintile of no-load foreign large-cap offerings.
Thornburg Readies New Go-Anywhere Fixed-Income Fund
Thornburg Investment Management plans to launch an opportunistic fixed-income offering. The firm recently filed plans with the Securities and Exchange Commission for Thornburg Strategic Income. This fund will be allowed to invest in government, agency, mortgaged-backed, asset-backed, and corporate bonds (including corporate high yield) in the United States. It can also invest in non-dollar and emerging-markets securities. The fund will also allow the use of derivatives. This strategy will be unlike any other fixed-income strategy available at Thornburg, as the manager's current lineup is limited to municipal and short-term bond offerings. We'll follow up with new details as they emerge.
Masters' Select International Adds Sixth Subadvisor
Litman/Gregory Fund Advisors has hired Northern Cross to serve as the sixth subadvisor for the recently reopened Masters' Select International
SunAmerica Replaces Navellier with Janus
SunAmerica Focused Series' board of directors has voted to replace Navellier & Associates with Janus Capital Management as one of the subadvisors for SunAmerica Focused Large Cap Growth
John Hancock Reopens Large-Value Fund
John Hancock reopened JHancock Classic Value
Funds Impose New Fees, Raise Old Ones
Effective Oct. 16, 2007, TIAA-CREF will charge a redemption fee on the institutional share classes of TIAA-CREF International Equity