Plus, news on American Century, MainStay, Phoenix, Oppenheimer, Fidelity, and more.
Rob Gensler, who has successfully run T. Rowe Price Global Technology
Developing Technology and Global Technology are Rottinghaus' first attempts at running funds solo, so we'll be watching his moves closely in the months ahead. With Gensler's departure from Global Technology and the lack of a long track record for Rottinghaus, we'll also be re-evaluating that fund's status as a Morningstar Fund Analyst Pick.
Changes at American Century
A recent press release from American Century Investments announced the departure of fund managers John Sykora and Gina Sanchez. Sykora, portfolio manager of American Century Select
Sanchez, according to the press release, was on the team "responsible for American Century's various asset-allocation portfolios (My Retirement, One Choice and Strategic Allocation)," and will be departing to work at a private endowment. Portfolio managers Jeff Tyler and Irina Torelli, also on the asset-allocation team, will continue to run these offerings.
Maine Leads the Way with New 529 Legislation
Maine Gov. John Baldacci recently signed legislation that provides residents of his state with tax deductions for contributions made to any state's, not just Maine's, 529 college savings plan. In contrast, only about half the states offer any tax deduction on contributions at all, and those that do offer the benefit only to state residents investing in home state plans.
Though the amount is a quite modest $250 per-beneficiary deduction, and it will not take effect until 2007, this more-inclusive tax incentive is the first of its kind in the 529 industry. The deduction will not be available to high-income families.
Despite the limited scope of the legislation, we hope that more states will eventually follow Maine's lead. If additional states do move in this direction, and several are currently considering legislation that would do so, it should simplify investors' ability to compare the wide array of available 529 plan options--both in-state and out-of-state--and promote a level playing field for all plans to compete for the assets of college savers.
MainStay Small Cap Opportunity to Close
The advisor to MainStay Small Cap Opportunity
The quantitatively driven fund has amassed nearly $1.15 billion in assets since its Dec. 30, 2002, inception. Additionally, the advisor manages another $325 million of institutional assets in separate accounts, using the same strategy. Funds in the small-cap space can become unwieldy if assets grow too large--a phenomenon we call asset bloat.
In the press release on the fund closure, MainStay Investments president Chris Blunt said: "We believe this decision is in the best interest of existing shareholders," and we would have to agree.
Phoenix Drops Engemann
The Phoenix Cos. dropped Engemann Asset Management as subadvisor to a few of its funds, including Phoenix Capital Growth
Phoenix said the switch was motivated by the funds' underperformance under Engemann, as well as the attraction they had to Harris' quantitative investment approach to the Harris Insight fund lineup. Additionally, Phoenix and Harris have entered a strategic alliance with Phoenix becoming the advisor for 19 of Harris' funds, which will be renamed the Phoenix-Insight Funds.
Oppenheimer to Close Real Asset Fund
Oppenheimer Real Asset
The move is an interesting one as it's pretty rare to see a fund close to existing investors, and usually the ones that do so are micro-cap funds. This fund invests in structured notes that are linked to commodity prices.
Vanguard Morgan Manager to Retire
Vanguard announced that Vanguard Morgan Growth
Paul E. Marrkand, who has served as comanager of Wellington's portion of the fund since 2005, will assume Rands' responsibilities.
Leuthold Launches Two Funds to Replace Two that Closed
Shortly after closing two funds to new and existing shareholders, Leuthold has filed plans to launch two new funds that have similar objectives. The Leuthold Asset Allocation Fund, like now-closed Leuthold Core Investment
However, Select Equities, which will mirror the domestic-equity portion of Asset Allocation, will use a quantitative, bottom-up stock-selection process, while Core Investment and Select Industries rely more on top-down industry calls; Leuthold reports that overlap between the two strategies is minimal.
AIM Gets Trendy
In the wake of the bear market and industrywide scandals most fund companies had embraced a more sober approach to fund launches, but we're starting to see that resolve weaken. Witness AIM's launch of seven funds, three of which target hot overseas markets.
The firm is launching funds that invest in China, Japan, and foreign bonds. In addition, it is launching four less trendy funds: AIM Structured Core, AIM Structured Growth, AIM Structured Value, and AIM Enhanced Short Bond.
Franklin Templeton, Too
Speaking of trendy, Franklin Templeton has filed with the SEC to launch a BRICs fund. BRICs stands for Brazil, Russia, India, and China, and it's a popular theme for investors chasing emerging-market riches. The basic premise is that these four countries' economies will become dominant players in global economy.
Mark Mobius and Tom Wu are listed as managers of the Templeton BRIC Fund which will charge a steep 2.44% on its A shares.
Fidelity Closing Contrafund
Fidelity Investments said that it is closing Fidelity Contrafund
The news is quite welcome, as Morningstar has been calling for a long time for Fidelity to close the funds. Manager Will Danoff has done an outstanding job at the funds, but he is currently running more than $70 billion. That huge sum will make it challenging for him to match his past success.
It's also worth noting that this move won't exactly staunch the flow of assets entering the funds. Contrafund is held in millions of accounts and 401(k) plans, and shareholders of both funds will be able to keep sending in new money after the closing date. In fact, Fidelity Low-Priced Stock
Philip L. Bullen, chief investment officer overseeing the U.S. large-cap core and capital-appreciation groups for Fidelity Management & Research Co. said, "Investor inflows into the two funds have accelerated--together they have taken in more than $12 billion in net new cash in the 12 months ending Feb. 28, 2006, and assets have continued to grow. We believe that closing Contrafund and Advisor New Insights at this time is in the best interests of the funds' shareholders, and stabilizing cash flows will help provide Will with the opportunity to maintain the funds' consistent performance track records."
Fidelity also said that Jason Weiner has been appointed associate portfolio manager of VIP Contrafund Portfolio. "In this role, Weiner will work closely with portfolio manager Will Danoff in providing additional investment ideas for the fund," Fidelity said in a press release. Weiner will continue to manage Fidelity Independence
Munder Capital Management has announced the appointment of John S. Adams to the post of chief investment officer, replacing Enrique Chang, who recently departed for American Century. Adams will retain a place on the management team of Munder Balanced