These new managers are struggling.
This article originally appeared in Morningstar FundInvestor, an award-winning newsletter that presents investment strategies and tracks 500 funds.
When an experienced fund manager departs, it's usually uncertain as to whether his or her shoes can be filled. If the replacement then posts poor results out of the gate, that raises further questions. Here's our take on three funds in that situation.
Shareholders of this former bull-market darling have endured a brutal stretch of performance: The fund has racked up six consecutive bottom-quartile showings in the world-stock category. In June 2003, in the middle of that streak, once-vaunted manager Helen Young Hayes, who had run the fund since its 1992 inception, retired. Laurence Chang, her comanager for four years, retained her growth-oriented strategy but was unable to turn the fund around and left Janus just 13 months later. The firm then handed the reins to Jason Yee, who had turned in solid results in his first three years at Janus Global Opportunities
Yee, however, hasn't looked any better than his predecessors thus far. Worldwide has lagged more than 85% of its rivals on his watch. (Global Opportunities, which he still manages, has actually been worse.) He has arguably been too contrarian, wading into out-of-favor sectors such as media, while ignoring areas like energy and most emerging-markets stocks. This has proved quite costly. Given Yee's previous success and his distaste for trendy names, we think the fund still has potential. But it's tough to recommend the purchase of new shares just yet.
TCW Select Equities
This fund suffered a big loss when manager Glen Bickerstaff stepped down at the end of 2004. He'd amassed a superb record, both during a six-year stint at this fund and at his previous charge, Transamerica Premier Equity
That type of strategy courts substantial risk--note the fund's 30% loss in 2002--and the managers have paid the price for their convictions. After a subpar 2005 campaign, the fund has gotten off to a poor start in 2006: Four of its top five holdings at the beginning of the year have posted a double-digit loss through April, and the fund lags nearly all of its rivals. However, we're impressed with Blum and Burlingame's knowledge of their holdings, and they're sticking to their guns.