Plus, Vanguard's newest fund, Fidelity manager changes, mergers, and more.
Artisan Partners will close Artisan International Value ARTKX, effective March 30. This means that six of the shop's eight retail funds are closed in some form or another. Artisan created this all-cap offering in mid-2002 and hired manager David Samra, formerly of the Oakmark Funds, to run it. Lifted by Samra's stock-picking and the tremendous performance of foreign smaller-cap shares, the fund has gathered $3.5 billion in assets, including retail, institutional, and separate account money. Investors will still be able to access the fund through 401(k) plans, but the close was designed to stem the tide of new money and to allow Samra and his team the flexibility to invest in stocks of all sizes in the future.
Vanguard Launches Newest International Fund
Vanguard's FTSE All-World ex-US Index Fund launched March 8. The fund offers broad global exposure to both developed and emerging markets, with the exception of the United States, and its expense ratio is 0.40%. It's also available for an expense ratio of 0.25% as an ETF.
Vanguard Cuts AMT Exposure in Muni-Bond Funds
Vanguard recently completed the sale of all bonds carrying Alternative Minimum Tax exposure in its 13-fund investment-grade muni bond lineup. Because Vanguard didn't finish the changes until early 2007, income earned in January and February may still be subject to AMT for 2007 tax purposes, for investors who pay this tax. Vanguard will announce more details soon. It will still own bonds subject to AMT in its muni high-yield and muni money market funds.
Specific types of municipal bonds, such as those backing the development of real estate for corporate zoning, may offer slightly higher yield, but they're subject to AMT. So, part of some funds' income may be taxable for certain investors--those who pay AMT. As the percentage of taxpayers subject to AMT grows, many fund families are now adjusting their muni-bond fund lineups to account for this trend. Investors who pay AMT should check a municipal-bond fund's AMT exposure (typically listed as a percentage of fund assets); many muni-bond funds specifically market their AMT-free status, making alternatives easy to find.
New Managers at Fidelity
Fidelity Investments named Stephen M. DuFour portfolio manager of Fidelity Focused Stock FTQGX, succeeding Robert J. Haber. We had predicted Haber's departure, as he works for Pyramis, Fidelity's institutional investment division, and the firm is making an effort to separate Pyramis from funds run by Fidelity Management and Research Company. Haber ran the large-blend fund for three years with good overall results. DuFour comes off an unsuccessful six-year stint running Fidelity Equity Income II FEQTX, during which time he failed to beat the large-value category average return. His fast-trading style was a bad fit for that fund given its large asset base. His performance was much better when he ran the much smaller Fidelity Advisor Equity Value FAVAX, which bodes well for Focused Stock, as it has less than $100 million in assets. Still, given DuFour's mixed record and the uncertainty of how his approach will translate to a focused fund, we'd steer clear.
Fidelity also named Gavin Baker successor to Brian J. Younger at several industry-specific funds: Fidelity Select Wireless FWRLX, Fidelity Select Telecommunications FSTCX, and Fidelity Advisor Telecommunications FTUAX. This wasn't a surprise either, given that Younger was recently named comanager of Fidelity Select Financial Services FIDSX and running two Select funds in different sectors is highly unusual. Elsewhere on the Select fund lineup, Stavros Koutsantonis succeeded Douglas Simmons on Fidelity Select Environmental FSLEX and Vincent Montemaggiore took charge of Fidelity Select Industrial Equipment FSCGX. He succeeds Chris Bartel, who has become a research director.
Fidelity's Select sector fund lineup tends to be volatile, and continuous manager changes cause uncertainty, not to mention transaction costs.PAGEBREAK
MFS Consolidates Lineups
MFS Investment Management announced plans to merge five funds, pending shareholder approval in mid-2007. MFS Strategic Growth MFSGX will merge into MFS Core Growth, a large-growth fund with above-average returns led by long-tenured skipper Steve Pesek. Also among large-growth funds, MFS Growth Opportunities MGOFX will merge into MFS Massachusetts Investors Growth Stock MIGFX. Large-blend fund MFS Capital Opportunities MCOFX will merge into MFS Core Equity MRGAX.