Plus, an antiterror fund name change, a terrible convertible fund dies, and more.
Morningstar's fund analysts cover 2,000 mutual funds. Their full analyst reports are available through Morningstar Principia Mutual Funds Advanced and Morningstar Advisor Workstation Office Edition.
Chicken Little Growth CHKNX pulled a shocker last week when it filed with the SEC to say that the advisor couldn't afford the fee subsidy for November and the fund would take a one-time hit of $0.32 to NAV as a result. Sure enough, at the end of Friday, the fund took a hit of nearly 3% to NAV as it fell $0.43 to $15.41. (On Dec. 11, the Performance History section of the fund's Web site was off.)
The fund said that because the advisor couldn't afford the fee subsidy, its expense ratio was rising from 3% to 12.5%. The filing stated that the fund's trustees "have requested that the advisor reimburse these expenses as soon as possible. ... The advisor has advised the board of trustees that it is actively seeking to raise capital to reimburse the Fund for all accrued reimbursable expenses; however, there is no guarantee that the advisor will be able to obtain such funds."
This is the first instance we at Morningstar can remember when a subsidy came off and was charged retroactively so that investors had no chance to get out after word of the expense ratio change came out.
Fund to Fight Terror Across the Style Box
One of the more remarkable name changes in fund history is set to happen.
Abacus Bull Moose Growth BULLX has changed its name to Roosevelt Anti-Terror Multi-Cap. And how will this fund fight terror? The fund's SEC filing says: "The fund will not invest in companies that have ongoing business relationships with countries that sponsor terrorism." Can a PowerShares Antiterror Small Value ETF be far behind?
Worst Convertible Fund to Be Put to Rest
ACM Convertible Securities CNCVX, the worst-performing convertible fund over the trailing one-, five-, and 10-year periods, is going to be liquidated. Rather than blame horrible management or ridiculous 2.25% expenses, the fund manager is blaming regulators: "The board of trustees has determined to redeem all outstanding shares of ACM Convertible Securities Fund and to cease operations of the fund due to the advisor's decision that it is no longer economically viable to continue managing the fund as a result of increasing regulatory and operating costs borne by the advisor." Gee, maybe if the fund didn't have horrific returns, it could have attracted enough assets to be economically viable.
BNY to Purchase Dreyfus Parent
Bank of New York Company BK has entered into an agreement to purchase Mellon Financial MEL, the parent of several asset management firms, including the Dreyfus funds. Should the deal close, the resulting firm, Bank of New York Mellon Corp., would be a near $60 billion firm by market cap. Its impact on the fund lineups is unclear, but Bank of New York's 16 small BNY Hamilton funds would likely be merged into their larger Dreyfus counterparts.
Fidelity Names Chemical Fund Manager Change
Christopher Bartel has been replaced by Duffy Fischer as manager of the Fidelity Select Chemicals FSCHX. This will allow Bartel to focus on the five other sector funds he runs. Fischer comes to Fidelity from Goldman Sachs & Co., where he worked for several years as an agriculture and basic materials analyst. It's nice to see Fidelity add experienced portfolio managers to its sector fund lineup.
Happy Birthday, Oakmark Select
Harris Associates fund Oakmark Select OAKLX, run by one of our favorite managers, Bill Nygren, recently hit the 10-year mark. Performance has looked middling at the fund in recent years, as management patiently waits for its investment ideas to play out, but its 10-year returns look spectacular. Over this time period, ending Nov. 30, the fund returned 17.85%, trouncing almost every other fund in the large-blend category, though for much of this time the fund landed in the large-value style box.