Plus, news on Fairholme's energy stake, Columbia fee cuts, and more.
Many fund managers that have participated in the housing boom of recent years by purchasing the stocks of homebuilders are this year feeling the pain of a slowing housing market as these stocks decline. Luxury homebuilder Toll Brothers
Muhlenkamp, however, got into Toll early on, which aided his fund's returns over the past several years. Despite the recent stock price volatility, he's sticking with his pick, along with others in the sector. He thinks the macroeconomic and fundamental stories behind the stocks are still sound. Alpine U.S. Real Estate Equity Fund
For those who are nervous about "housing bubbles," though, there are some soothing words from PIMCO managing director W. Scott Simon. In a recent commentary, Simon said that while "the housing market continues to slow every day it's not falling off a cliff."
Fairlholme's Energy Stake
It's well known that Bruce Berkowitz, the lead manager of the Fairholme Fund
"The market also seems to be undervaluing current and expected cash flows from our non-U.S. energy companies, Canadian Natural Resources Ltd. and Penn West Energy Trust, which represent 9.27% and 6.83% of the Fund's new assets, respectively. Our companies have the people, plans, and assets in place to dramatically increase production of higher-value products--the ultimate hedge against unforeseen lower prices. Meanwhile, geopolitics, a dearth of cheap and easily obtainable supply, and the world's increasing desire for basic pleasures we take for granted argue for a stubbornly high oil price, currently over $70 per barrel (in both spot and forward markets)."
Columbia Cuts 12b-1 Fees on B Shares of Acorn Funds
Columbia Wanger Asset Management, advisor to the Columbia Acorn fund lineup, has announced it is cutting the 12b-1 fees on the B share class of these funds, due to increased economies of scale the firm has achieved from asset inflows. The 12b-1 fees will be cut by 10 basis points, from 0.85% to 0.75%, below the industry average for B shares. We're glad to see these fees come down, as they will help make the fund more competitive and may force other asset management firms to follow suit, which would be positive for investors.
Franklin Templeton Announces Four Target-Date Funds
Franklin Templeton Investments recently launched its Franklin Templeton Retirement Target Funds, which, like other options in the target-date category, will provide asset allocations that get more conservative as investors approach retirement. These four fund-of-fund products will have projected retirement dates of 2015, 2025, 2035, and 2045. Portfolio manager T. Anthony Coffey will consider "the underlying funds' foreign and domestic exposure, market capitalization ranges and investment styles" when choosing equity funds for the portfolios, the statement said. When choosing fixed-income funds, he will focus on "obtaining the maximum amount of current income," though we hope this doesn't come at the expense of total return.
Legg Mason Leaves South Dakota 529 Plan
Legg Mason Capital Management recently announced it would no longer serve as distributor of South Dakota's Core4College 529 Plan, effective Sept. 2, 2006. As of July 2, this small $35 million plan no longer accepted new accounts. We don't think this move says too much about Legg Mason's commitment to the 529 business, however, since its purchase of the Smith Barney fund lineup (now under the Legg Mason Partners name) provided the firm contracts to distribute its funds to Illinois' Bright Start College Savings Program, with over $1.8 billion in assets, and Colorado's Scholars Choice College Savings Program, with nearly $2 billion in assets.