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Fund Times: Longleaf Partners International Reopens

Plus, news on Neuberger Berman International, Wyoming's College Savings Plan, and more.

Russel Kinnel, 07/14/2006

Longleaf Partners International Reopening
The list of attractive open foreign-stock funds just got longer. Southeastern Asset Management announced it reopened $3 billion  Longleaf Partners International LLINX as of July 10, 2006. The fund closed in February 2004.

The firm said it was reopening the fund because its managers were finding more attractive investments to buy. Mason Hawkins, chairman and CEO of Southeastern and comanager of the fund, stated, "In the nineteen months since the fund closed, we have found a number of compelling investment opportunities. The recent volatility in markets around the globe has produced additional high quality companies that are adequately discounted, and a number of existing holdings are attractively priced. The Fund's cash level has decreased from over 30% to under 5%.

"The portfolio currently holds a combination of the most vested corporate managements and more quality holdings than at any time in its history," Hawkins said. "Cash inflows received from opening the International Fund will allow shareholders to own more of these franchises and position the Fund to take advantage of future volatility. New purchases will decrease the fund's price-to-value ratio (P/V). A lower P/V increases the margin of safety in the portfolio and improves the long-term return potential for all of our partners in the fund. We are adding significant personal capital to Longleaf International."

We're encouraged to see the logic behind the reopening. Hawkins says it's in existing shareholders' best interests. That's a standard that all closed funds should apply when they consider reopening.

Wyoming to Fold College Savings Plan and Adopt Colorado's
Wyoming residents saving for college just got a boost. The state of Wyoming said it will fold its high-cost 529 plan and encourage investors to roll their accounts into Colorado's CollegeInvest plan. Wyoming's plan had made Morningstar's worst 529 plans list three years running.

Under the new structure, Wyoming residents will be able to invest in any 529 plan offered by CollegeInvest and enjoy the same preferred fee structure as Colorado residents. The Colorado Plan is much better than Wyoming's, so investors are better off with the change.

Neuberger Closes One Foreign Fund, Launches Another
As we noted in an earlier Fund Times,  Neuberger Berman International NBISX will close to new investors at the end of July. As it turns out, though, investors still will be able to gain access to the same managers running a similar--though not identical--strategy. The firm will open Neuberger Berman International Large Cap on Aug. 1. The main difference between the two is that Large Cap will invest exclusively in stocks with market caps above $2.5 billion, whereas International invests a meaningful amount in small caps.

The new fund will have the same managers--Benjamin Segal and Milu Komer--but investors should be aware that there will be other differences besides the market-cap guidelines, and thus the performance of the two funds could differ significantly. In particular, Segal told Morningstar, the new Large Cap offering will be allowed to invest more of its assets in emerging markets than the original fund and will be somewhat more concentrated as well.

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