• / Free eNewsletters & Magazine
  • / My Account
Home>Research & Insights>Fund Times>Fund Times: Oppenheimer Restricts Access to Two Hot Funds

Related Content

  1. Videos
  2. Articles
  1. Top Bond-Fund Picks for Retirees

    Morningstar's Eric Jacobson runs the gamut with some of his favorite fixed-income funds, including ideas for core, short-term, multisector, high-yield, and muni exposure.

  2. Benz's and Kinnel's Picks for Starter Portfolios

    Morningstar's directors of personal finance and fund research list some favorite topnotch building blocks for beginning investors.

Fund Times: Oppenheimer Restricts Access to Two Hot Funds

Plus, news on Waddell & Reed, Third Avenue, Fidelity, Dreyfus, more.

Morningstar Analysts, 02/24/2006

Oppenheimer Funds will close Oppenheimer Developing Markets ODMAX on March 6 to new omnibus accounts, such as 401(k) plans and brokers who do not have existing accounts with the fund. A lot of hot money has poured into emerging markets, according to George Evans, head of the global equity research group. Since manager Mark Madden took over from Rajeev Bhaman in December 2004, the fund has grown from $2.5 billion in assets to $9 billion. To further reduce hot money from entering the fund, the advisor raised the minimum investment to $50,000.

Also, Oppenheimer International Small Company OSMAX is closing at the same time in the same manner and also raising its minimum to $50,000. Given the fund's focus on small- and even micro-cap stocks (it has the lowest average market cap in the foreign small/mid-growth category), we're concerned about its ability to execute its strategy with a $1.5 billion asset base. Other foreign small-cap managers have told us that once a fund's asset base tops $500 million, it gets harder to consistently execute an international small-cap strategy. This fund is also very heavy on emerging markets (Korean stocks consumed 18% of assets as of Jan. 31, 2006, Indian equities 6.4%, and Chinese stocks 2.7%), as these regions have been very hot over the past few years.

Waddell & Reed Shuffles Its Farm System

Waddell & Reed is making a variety of manager changes at many of its smaller namesake offerings, as well as at some funds at its Ivy subsidiary. Chace Brundige will replace Barry Ogden at Waddell & Reed Advisors Tax Managed Equity WTEAX, Erik Becker and Gus Zinn will step in for Jim Wineland at Ivy Core Equity WTRCX, and Bryan Krug will replace Louise Reike at Ivy High Income WRHIX. John Maxwell will join Thomas Mengel as comanager of Ivy International Value IVIAX.

Though not all of the new managers have run funds before, all of them have been with Waddell & Reed for a number of years. The moves seem consistent with the philosophy of developing and rewarding younger in-house talent by providing management opportunities at smaller funds within the family. At the same time, the managers being replaced are free to concentrate on their bigger charges. It's encouraging to see that Waddell & Reed is cultivating its own talent, as long as this particular approach--new managers captaining smaller funds--isn't considered a training-ground for new stars, which could lead to higher manager turnover in those funds.

Third Avenue Small-Cap Value Closing

Third Avenue Small-Cap Value TASCX will close to new investors on Feb. 28.

"We have experienced tremendous cash inflows and we want to responsibly control the growth of the fund," said David Barse, Third Avenue president and CEO in a press release. With assets of $2.3 billion, this small-cap blend fund is more than twice as large as typical rivals, which might make it harder to deploy the fund's assets in a manner consistent with its investment strategy. Moreover, 39% of the fund's assets sit in cash and cash-equivalent investments.

blog comments powered by Disqus
Upcoming Events
Conferences
Webinars

©2014 Morningstar Advisor. All right reserved.