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.
Sentinel Alters Compensation Plan
Advisory firm Sentinel Investments disclosed in regulatory filings a new compensation plan it hopes will incentivize its managers to stay put. The firm recently announced that four of its managers were jumping ship to Eagle Asset Management. Under the new compensation plan, portfolio managers are eligible for Sentinel Value Units, which are described in the filing as representing an equity ownership in the advisory firm. The awarding of the units would be based on performance and would vest over a period of time, which could improve retention.
Behind the Scenes of Janus’ Manager Changes
Janus, the onetime mutual fund darling, has endured its fair share of manager changes. In August 2012, the firm announced the departure of John Eisinger at Janus Global Select JORNX and last year it parted ways with David Decker, who ran Janus Contrarian JSVAX. Those exits followed many more since 2007, some of which were due to poor performance and others because managers were jumping ship. Regardless, Janus has been forced to find new talent to run those funds. Greg Carlson, Morningstar's lead analyst on this fund family, recently examined just how well the firm has done filling those vacancies. Click here for the full story.
Wells Fargo Shuffles Managers
Wells Fargo announced Margie Patel will take over as manager of its Advantage High Yield Bond EKHAX fund. Patel is currently the manager of Wells Fargo Advantage Diversified Capital Builder EKBAX and Wells Fargo Advantage Diversified Income Builder EKSAX. Prior to joining the firm in 2007, she ran Pioneer High Yield TAHYX for almost a decade. High Yield Bond shareholders could see Patel build up a small equity and convertible bond component to the fund since her other charges include similar positions.
Jeffrey Megar is no longer a comanager at SSgA High Yield Bond SSHYX. Catherine Powers remains a portfolio manager on the fund. She is joined by new comanager Charles Moon, who previously served as a portfolio manager for Oppenheimer Funds.
American Beacon added two new members to their funds' board of trustees. Gerard Arpey joined the board after serving as chairman and CEO of AMR Corp. AAMRQ and American Airlines from 2003 to 2011. Barbara McKenna, who currently serves as a managing principal for Longfellow Investment Management, will join the board as a noninterested trustee.
Calvert Ultra-Short Income CULAX and Calvert Government CGVAX have added Vishal Khanduja as a comanager. Khanduja previously served as a comanager of Columbia Inflation Protected Securities APSAX from May 2010 to May 2012.
William Pang has departed as a comanager of ING Greater China IFCAX.
This Fund Times column Morningstar erroneously said Niklas Nordenfelt and Phillip Susser were leaving Wells Fargo. That was incorrect. The two managers, along with their 15-person team, are still running $5.3 billion in mutual funds and institutional and separate accounts.
Mutual fund analysts Michelle Canavan, Flynn Murphy, and Rob Wherry contributed to this report.