Meridian deals with the death of its founder and more.
AllianceBernstein is downsizing its global equity analyst staff and shuffling its manager ranks in what is the firm's second major overhaul since the 2008 downturn. AllianceBernstein says the moves will reduce redundancies and reorient the product lineup toward areas of growth. But cost-cutting may also be a priority given the fund company's lackluster results the past few years.
The firm announced it will eliminate 31 investment positions. Most of those cuts will come in the analyst pool. The headcount of the global equity analysts will shrink to 84 from 106. The firm manages $81 billion and $44 billion in value and growth strategies, respectively.
In addition to analyst staff reductions, several funds will undergo manager changes. Overall, nine portfolio managers are leaving. For example, Negative-rated AllianceBernstein Large Cap Growth APGAX has dropped current manager Scott Wallace and his team, marking the fifth manager change at this offering since 2003. Taking his place is Frank Caruso, who has produced mixed results at AllianceBernstein Core Opportunities ADGAX and Alliance Bernstein Growth & Income CABDX. Those are blend funds that employ a relative-value approach, but the firm said Caruso has run an institutional large-cap growth account that has beaten the Large Cap Growth mutual fund over the past three years. Caruso's bio also says he's been head of the firm's U.S. growth team since 2008. Meanwhile, Negative-rated AllianceBernstein International Value ABIAX has added two managers to its team, including the firm's chief investment officer in Japan. In addition, Eric Franco, a current manager at International Value, will also assume the lead role at AllianceBernstein Global Real Estate Investment AREAX.
Update on Changes at Meridian Funds
Aster Investment Management, the advisor to the Meridian funds, has begun the difficult process of moving on after the recent death of its founder, Richard Aster.
Longtime Meridian Value MVALX manager Jamie England is assuming a broader leadership role at the firm and will become a comanager at Meridian Growth MERDX and Meridian Equity Income MEIFX. His colleague James O'Connor will remain a comanager on Value and Equity Income, while William Tao continues as a manager at Growth. The team says it has no intention of altering the funds' strategies.
England's role makes sense. Growth and Value do employ different strategies, but both leverage the same in-house research, keep turnover and volatility low, and have between 10% and 15% holdings overlap. For more than 10 years England participated in the investment meetings for both funds and was often a sounding board for Aster on new ideas. Granted, England could be stretched a bit thin in his new role. He's said he is open to hiring new talent if need be. That process, though, could take time.
Looming questions remain about the fate of the firm and the long-term management of the funds as the firm works through succession issues with Aster's estate over the next few weeks. Morningstar has put the ratings for Meridian Value and Meridian Growth under review until then. Current shareholders are in capable hands. But investors considering a new position here should wait until there is more clarity about the future of the firm.
Are These Five Laggards Now Leaders?
The Dow Jones Industrial Average has been flirting with the 13,000 mark recently and has posted a 6.4% gain for the year to date through Feb. 22, 2012. The broader run-up in stocks has been a welcome change of pace for several funds that ended last year ranked near the bottom of their categories, but suddenly find themselves atop their peer groups. Of course, two months of performance doesn't a comeback make for the sample of funds that have rebounded listed below. Indeed, none of them have gained enough ground to erase their 2011 losses.
Resurgent financial stocks have been a boon for many of the funds. Fairholme FAIRX, for example, has seen its positions in AIG AIG, Citigroup C, and Bank of America BAC post strong gains this year, lifting it to the top of the large-value peer group.
-source: Morningstar Analysts
Royce Special Equity Closes to New Investors
Royce Special Equity RYSEX is closing to new investors on Feb. 29, 2012. Manager Charles Dreifus hinted in late 2010 that the Gold-rated small-blend offering may stop taking new money. Since then the fund has swelled to $2.6 billion after taking in $1.6 billion the past four years. Closing the fund protects current shareholders by keeping assets low enough to pursue investments ideas. Dreifus previously closed the fund in 2004 when he didn't find sufficient investment ideas to invest in. Current shareholders will still be able to buy shares.
Aston Switches Subadvisors
Aston has changed the subadvisor on Aston/Crosswind Small Cap Growth ACWDX to Lee Munder Capital Group from Crosswind Investments. The move will also trigger a name change to Aston Small Cap Growth. It appears the change is due to current manager Andrew Morey switching firms. Aston has a track record of following managers it likes even if the manager heads to a new investment shop. Aston has made a similar decision twice before when longtime Aston/Fairpointe Mid Cap ABMIX manager Thyra Zerhusen switched employers in 2002 and then started her own firm in 2011.
RiverNorth DoubleLine Strategic Income RNSIX will close to new investors on March 30, 2012. The fund, which is comanaged by Jeffrey Gundlach, has jumped to $800 million in assets after opening its doors in early 2011.
Anmol Mehra has been named a manager at Fidelity Stock Selector Small Cap FDSCX. He joins the current team composed of Richard Thompson, Rayna Lesser, Shadman Riaz, Patrick Venanzi, and Morgen Peck.
Northern Multi-Manager International Equity NMIEX added Northern Cross to its list of subadvisors.
Cove Street Capital is now the lead advisor on CSC Small Cap Value CSCSX. The firm also serves as a subadvisor on Masters Select Smaller Companies MSSFX.
Brian Woglom became a portfolio manager on American Century Mid Cap Value ACLAX on Feb. 17, 2012. Woglom has been an analyst with the firm since 2005 and joins Phillip Davidson, Michael Liss, and Kevin Toney on the fund's management team.
Brian Hess joined the management team of Legg Mason BW Global Bond Opportunities GOBAX, Legg Mason BW International Opportunities Bond LMOTX, and Legg Mason BW Absolute Return Opportunities LROAX on Feb. 22, 2012.
Mutual fund analysts Katie Reichart, Kailin Liu, and Rob Wherry contributed to this report.