Marsico maneuvers with lenders, Calamos closes two funds, and more.
Matthews Asian Growth & Income MACSX will reopen after 10 months of consecutive outflows since this January. The fund, which holds a Morningstar Analyst Rating of Silver, is slated to reopen on Jan. 4, 2012, after closing one year earlier. This is the second time the fund, which has $3.1 billion in assets, has reopened. Fund assets grew rapidly in the early 2000s, and the fund closed in 2003 before a 32% loss and $2.3 billion in outflows led Matthews to reopen its doors in late 2008.
Managers Robert Horrocks, Jesper Madsen, and new manager Kenneth Lowe have a conservative but lucrative strategy. They buy dividend-paying stocks on the cheap and also invest in attractively valued convertibles, corporate and government bonds, as well as preferred stocks. This mix has helped the fund be much less volatile than its peers in the Pacific/Asia ex Japan category. Over the trailing three-, five-, and 10-year periods, the fund's standard deviation is two thirds to one half that of the category average. The fund's performance also sits at the top of its category over the trailing 15-year period.
Despite its attractive metrics, the fund has dropped almost 12% this year through Dec. 20, as China and other Asia markets have struggled. That loss is significantly smaller than the group norm, but it's been painful enough in absolute terms to fuel roughly $580 million in outflows for the year through Nov. 30. (The Pacific/Asia ex-Japan category experienced outflows of $2.9 billion in that time period.) But this fund's proven strategy and fine long-term record remain intact, and it remains well worth a look from risk-conscious emerging-Asia fans. Sibling fund Matthews Asia Small Companies MSMLX will also reopen in January.
Marsico Makes Maneuver with Lenders
Marsico Capital Management, or MCM, may have staved off another debt restructuring.
MCM and its senior lenders agreed to eliminate a debt covenant that required the firm to maintain $30 billion in assets under management. The change buys the firm some time as market depreciation and outflows continue to cut down its asset base. MCM's assets, which are mostly subadvised and institutional accounts, dropped to $38 billion during this year's third quarter, down from $51 billion in 2010.
The covenant was a part of the firm's October 2010 debt restructuring, a measure triggered by the firm's already declining asset base. Firm founder Tom Marsico, along with several partners, bought MCM back from Bank of America in 2007 in a highly leveraged deal. (Marsico founded MCM in 1997 and sold the firm to Bank of America in 1999.)
Still, the firm's financial issues are a concern. It may be harder for the portfolio managers to ride out rough patches of performance and asset outflows that may occur with Marsico's high-conviction approach and already witnessed with flagships Marsico Growth MGRIX and Marsico Focus MFOCX. It also may be more difficult to attract and retain skilled stock-pickers.
Calamos Growth & Income to Soft Close
Calamos Growth & Income CVTRX, noted for achieving peer-beating returns with tame volatility, will close to new investors Jan. 20, 2012, as will its sibling Calamos Global Growth & Income CVLOX.