BlackRock woos Putnam veteran, more change at Marsico, and Sentinel ups pay plan.
T. Rowe Price announced company veteran Preston Athey will step down from Silver-rated T. Rowe Price Small-Cap Value PRSVX on June 30, 2014, a fund he's run for more than 20 years. The only manager with a longer tenure in the small-blend category is Chuck Royce. The fund gained an annualized 12% during Athey's stint, outdoing the category average and the Russell 2000 Index by more than 3 percentage points during that time. The fund also lost less than peers in down markets and was less volatile, as measured by standard deviation. Athey will be succeeded by David Wagner, who has been an associate portfolio manager on the fund since 2005 and for most of the past five years has run T. Rowe Price US Smaller Companies Core Equity, a SICAV vehicle. He has helped guide that strategy to an annualized 2.4% return the past five years versus 1.2% for the Russell 2500, the account's benchmark. After handing off Small-Cap Value in 2014, Athey will remain with T. Rowe as a mentor and a member of the fund's investment advisory committee, much like longtime T. Rowe Price New Horizons PRNHX manager Jack Laporte did when he stepped down in 2010.
BlackRock Successfully Woos Putnam Manager
BlackRock has hired Bartlett Geer as a managing director on its fundamental equity team. Geer was previously the lead manager of Bronze-rated Putnam Equity Income PEYAX. It is still unknown what his specific responsibilities will be at BlackRock, but he is due to start his new position in September.
Geer's departure is a loss for Putnam Equity Income shareholders. He used a mix of quantitative computer models and fundamental research to find attractively priced stocks, primarily among the market's dividend-payers. He wasn't shy about going his own way. Individual stock and sector exposures frequently deviated from peers' and, unlike many managers with an equity-income mandate, Geer was comfortable trading lower yields for compelling growth prospects. That strategy caused the fund's overall dividend yield to lag other equity-income funds, but Geer built an impressive record nonetheless. The fund's annualized 7.1% gain the past decade through Aug. 15, 2012, outpaced the average peer and the S&P 500 by around a percentage point.
Shareholders should brace for some changes. Geer's successor, Darren Jaroch, manages Putnam International Value PNGAX and several institutional accounts, including one focused on both international and domestic dividend-payers. More importantly, Jaroch worked closely with Geer on Equity Income in the early 2000s and was the driving force behind the quantitative screens that are still in use. Jaroch says he may refashion the portfolio in two key ways. He'll likely reduce the fund's mid-cap exposure and use the proceeds to invest further up the market-cap spectrum. He'll also buy higher-yielding stocks that will help push the fund's dividend yield above its current 1.9%. That could slightly goose turnover in the short term, but Jaroch says changes will happen incrementally in order to minimize the tax bite.
BlackRock Alters Global Equity Fund
BlackRock is giving its Bronze-rated Global Dynamic Equity MDEGX fund a complete makeover. The fund will change its name, mandate, and benchmark index around Oct. 15, 2012. It will also switch out its management team. The existing team, including lead manager Dennis Stattman, will continue to focus on Gold-rated BlackRock Global Allocation MDLOX. (No members of Stattman's team are leaving the firm.) Here, though, the day-to-day responsibilities will be passed to BlackRock's global equity team based in London and run by Richard Turnill.
Investors will notice changes later this year. BlackRock Global Equity will be known as BlackRock Long-Horizon Equity. As the name changes, so, too, will the fund's investment strategy. Turnhill's team, which consists of seven sector specialists and several portfolio managers, will have the flexibility to invest across the global stock universe. Previously, this fund had to have at least 40% of its assets in foreign stocks. That stipulation no longer exists. The biggest change may be the construction of the fund's portfolio. Currently, the fund's assets are spread across 500-plus holdings. BlackRock expects the new version of the fund to be concentrated around 30-50 holdings. The firm, though, is cognizant of the potential tax burden that comes with selling so many holdings, including a sleeve of commodities-related positions. As with the portfolio changes at Putnam Equity Income, changes here are supposed to happen incrementally in order to minimize capital gains concerns.
More Marsico Fund Changes
Marsico Capital Management, which has been dealing with several manager departures lately, will no longer be the subadvisor on Harbor Flexible Capital HIFLX. The $22 million fund, which was launched in 2011, will be liquidated in October 2012. The move comes after Doug Rao, the lead manager on this fund and at its clone, Marsico Flexible Capital CCMAX, left the firm in July 2012.
Marsico has also decided to liquidate Marsico Emerging Markets MERGX in September 2012. The fund has struggled since its December 2010 launch, trailing more than 85% of peers from inception through July 2012.