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Fund Times: American Century Going More Load?

Plus, a First Eagle manager resigns, Putnam fires manager, and more.

Morningstar Analysts, 04/02/2007

American Century Investment Management is planning to shake up its fund lineup's share class structure, which will result in many more of the funds going toward the load option. According to the firm, the intention is to replace a complicated and confusing share class structure with a straightforward one that individuals and advisors can better understand.

The changes, should they be approved by fund shareholders, will result in an increase in the load fund lineup from 26 funds to 39 total, including some prominent options. For instance, in the large-cap space, American Century Equity Income TWEIXAmerican Century Equity Growth BEQGX, and American Century Ultra TWCUX, some of the firm's better-known funds, will all transition from the no-load Investor share classes to the load lineup, and will be primarily targeted toward fee-based advisors and retirement plans.

The changes don't stop with equity funds, however, as several fixed-income options (in both the taxable and municipal lineups) will also be making the move to load share classes. For example, American Century Inflation-Protection Bond APOIX, American Century High-Yield Bond ABHIX, and American Century Long-Term Tax Free ACLVX all currently have no-load share classes that will close to new investors should these changes go through.

Investors should expect to see proxies mailed in mid-April, though even if successful, the no-load Investor share classes would not close until Sept. 28, according to the firm.

Major Manager Change at First Eagle
A surprising turn of events hit First Eagle Funds on March 26, when manager Charles de Vaulx resigned from the funds' advisor, Arnhold and S. Bleichroeder. Since the beginning of 2005, de Vaulx had been sole manager of First Eagle Global SGENX, First Eagle Overseas SGOVX, and First Eagle U.S. Value FEVAX, and he ran First Eagle Gold SGGDX with an associate manager. Moreover, he had served as comanager, associate manager, or analyst with those funds for more than 15 years prior to becoming sole manager.

Replacing de Vaulx is the funds' former manager, Jean-Marie Eveillard, who had run First Eagle Global (formerly known as SoGen International) from 1979, and the other younger funds since their inceptions, at first alone and later with de Vaulx. A cautious and patient value-oriented manager, Eveillard racked up an outstanding long-term record during his tenure, even though the funds lagged during the technology-fueled rally of the late 1990s. Eveillard, who turned 67 earlier this year, had retired at the end of 2004.

First Eagle officials say they will not provide any details on the reasons for de Vaulx's departure at this time, and they are not giving a precise estimate for how long Eveillard is expected to manage the funds during this go-round, though they do say it's more likely to be for just a few years rather than long-term.

Putnam Research Dismisses Manager
Putnam Investments' has fired Mark Bogar from Putnam Research PNRAX, and there are no current plans to replace him. Bogar led the five-member consumer team at this "best-ideas" portfolio, as well as for other large-cap Putnam funds. The departure doesn't dispel our doubts about the fund, so while we're glad to see the firm taking some steps to try to improve both this fund and the overall quality of firm research, we're not convinced this action alone will do the trick.

PIMCO Adds Fitch to Rating Agency Guidelines
PIMCO announced in a recent regulatory filing that it would be adding the Fitch, Inc. rating agency to its list of approved credit quality rating providers for the purposes of credit quality restrictions across its mutual fund lineup. Fitch joins the Moody's Investors Service, Inc. and Standard & Poor's Rating Service.

Barclay's to Offer Preferred ETF
Barclay's Global Fund Advisors has filed to offer the iShares S&P U.S. Preferred Stock Index fund, which will attempt to track the S&P U.S. Preferred Stock Index. This new exchange-traded fund, if approved, will invest at least 90% of its assets in its underlying index, with the ability to also take non-index positions management believes would aid the fund in more closely tracking index performance. The index includes preferred stocks that have a market capitalization of at least $100 million and meet the index providers' criteria on various measures, such as price and liquidity, among others.

The fund will be managed by Patrick O'Connor and Jane Leung, who have run money for Barclay's since 1999 and 2001, respectively. The fund's expected expense ratio is 0.48%.

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