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Fund Times: New Funds from American, Oakmark, Masters'

Plus, Delaware Funds president resigns, Masters' Smaller Companies reopens and more.

Morningstar Analysts, 07/24/2006

American Funds has filed to launch its first new mutual fund of the decade. The firm plans to launch Short-Term Bond Fund of America on Oct. 1, 2006, according to a filing with the SEC. The fund fills the gap between the firm's Intermediate Bond Fund of America AIBAX and money market funds.

The firm's last mutual fund launch was American Funds New World NEWFX, which debuted in 1999.

Short-Term Bond Fund of America looks to be a pretty straightforward high-quality short-term fund that will likely own a diversified portfolio of Treasuries, mortgages, and corporate bonds: The filing states, "The fund seeks to provide you with current income while preserving your investment by maintaining a portfolio having an average effective maturity no greater than three years and consisting of debt securities primarily with quality ratings of AA or Aa or better." No managers have been named, but it will likely be similar to the group that runs American's other taxable-bond funds.

Oakmark Plans Global Select Fund
Oakmark is taking its focused approach on the road. Harris Associates has filed with the SEC for a new world-stock fund that will typically invest in just 20 stocks. The fund will be run by the firm's best-known managers. Bill Nygren will run the domestic half of the portfolio while David Herro will select foreign stocks. Expenses are expected to begin at 1.75%. According to the filing, the earliest possible launch date would be at the end of September 2006.

Masters' Reopens Small-Cap Fund
Masters' Select said it has reopened Masters' Select Smaller Companies MSSFX. The firm had temporarily closed the fund when it fired David Anthony of Ranger Investment Management. However, it has now found a replacement and so it has reopened now that it has the capacity to take in more money. The new managers are Tucker Walsh and Michael Malouf of Copper Capital Partners.

Copper Capital began running Old Mutual Copper Rock Emerging Growth OMARX in January 2006, but the pair have longer records from previous funds. Walsh produced decent returns at the now merged-away State Street Research Emerging Growth, while Malouf oversaw a steep rise and fall at Neuberger Berman Millennium NBMIX.

Delaware Funds CEO Resigns
Jude Driscoll--president and CEO of Lincoln Financial's asset management arm, Delaware Investments--resigned his post today. Driscoll joined Delaware as head of fixed income in 2000. He then took the posts of president and CEO in 2002. Under his watch, Delaware successfully attracted two talented management teams from other firms: A crew from Merrill Lynch, led by Tysen Nutt, that runs Delaware Large Cap Value DELDX and an ex-Transamerica management team, led by Jeff Van Harte, that leads Delaware Large Cap Growth DGDAX. The reason for Driscoll's departure is unclear at this point, as are the firm's succession plans.

New Focused Masters' Fund
At the end of June, Masters' Funds launched Masters' Select Focused Opportunities--an even more focused version of its typical funds. Three pairs of managers pick just five to seven stocks each, making for an overall portfolio of just 15 to 21 stocks. The pairs are Craig Blum and Stephen Burlingame of TCW, Christopher Davis and Kenneth Feinberg of Davis Selected, and Michael Embler and Peter Langerman of Mutual Series. The fund charges an expense ratio of 1.5%.

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