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Artio Global Investment Shuttering U.S.-Equity Funds

Western makes manager changes, Loomis Sayles to rename a fund, and star Vanguard health-care manager to retire.

Morningstar Fund Analysts, 09/07/2012

Artio Global Investment closed Artio US Multicap JMLAX, Artio US Midcap JMDAX, Artio US Smallcap JSCAX, and Artio US Microcap JMCAX to new investors on Aug. 30, 2012. A spokeswoman for Artio said the firm expects to liquidate the funds around the end of October.

These funds have struggled in recent months. All four strategies have been in net outflows since the beginning of 2011, and none have outperformed their category averages in the trailing three-year period through Aug. 31. Additionally, the small size of the funds already made them a difficult business case for parent company Artio.

The liquidations coincide with firmwide struggles at Artio and should allow the shop to focus more closely on its core business of international funds and fixed-income funds. The firm in general has struggled, seeing net outflows in 2008, 2010, 2011, and so far in 2012. The firm's flagship international offerings have been in outflows for almost five consecutive years. Its fixed-income lineup, though, has experienced some growth in the same time frame, as most bond funds have enjoyed net inflows since the financial crisis.

Western Announces Manager Changes
Western Asset announced management changes at two dozen funds in an effort to more accurately portray the impact of the firm's team-based approach on the offerings. In each case, the existing managers are staying put and there are no changes to the funds' mandates. The moves follow on the heels of a broader rebranding effort at the firm.

Most moves are happening at the top. Dennis McNamara, the head of U.S. Generalists, has been added to the portfolio management team of a dozen municipal-bond offerings. He'll work alongside the funds' existing team of Stephen Walsh, the firm's chief investment officer; Robert Amodeo, the head of municipal bonds; and comanager David Fare. McNamara was also added as a manager on Western Asset Total Return Unconstrained WAUAX and Western Asset Adjustable Rate Income ARMZX. Western also appointed Timothy Settel as a manager at Western Asset Adjustable Rate Income. Settel specializes in bank loans, which are a part of the fund's portfolio.

McNamara and Settel weren't the only ones adding to their responsibilities. Mike Buchanan, head of credit, was named portfolio manager at Western Asset Corporate Bond SIGAX, joining Walsh and Ryan Brist, the head of investment-grade corporates. Portfolio managers Gordon Brown and Robert Abad joined Western Asset Emerging Markets Debt LWEAX, and Walter Kilcullen was added to Western Asset High Income SHIAX and Western Asset High Yield WAYAX. Several funds with wide-ranging strategies, such as Western Asset Global Multi Sector WALAX, saw the addition of several portfolio managers each.

In July, Western, a subsidiary of Legg Mason, announced that it would merge four funds and begin removing the Legg Mason name from several of its offerings.

After Lawsuit Settlement, Loomis Sayles to Rename Absolute Strategies Fund
On Sept. 28, Loomis Sayles will give Loomis Sayles Absolute Strategies LABAX a new name, dubbing it Loomis Sayles Strategic Alpha Fund. 

The name change came about in the wake of the settlement on Aug. 20 of a federal lawsuit that had been filed by Massachusetts-based Absolute Investment Advisers, which has its own, massive ($4.3 billion) mutual fund that it calls the Absolute Strategies Fund. 

A Loomis Sayles spokeswoman confirmed the scheduled date of the name change and that there was a settlement to the legal action. However, she declined further comment. An Absolute Investment Advisers spokesman also declined to comment.

The similarity of the funds' names wasn't coincidence. Long ago, Absolute Investment Advisers had trademarked the Absolute Strategies Fund name for a mutual fund that it subsequently hired Loomis Sayles to subadvise. After Loomis Sayles launched its own Loomis Sayles Absolute Strategies Fund in late 2010, Absolute Investment Advisers sought to block Loomis' use of that phrase in the fund's name. Loomis subsequently countered before patent and trademark officials that the name was generic, and submitted paperwork seeking to cancel Absolute's trademark.

As a result of the Aug. 20 settlement, Loomis Sayles will change its fund's name and drop efforts to cancel Absolute's trademark.

Star Vanguard Health Care Manager to Retire
On Wednesday, Sept. 5, Vanguard announced that Ed Owens, manager of Vanguard Health Care VGHCX for the past 28 years, will retire at the end of the year.

Owens has managed the fund since its inception, compiling one of the best records of any mutual fund manager. An annualized return of 16.3% since Owens' May 23, 1984, start surpasses the S&P 500 Index's results by 5.6 percentage points. Jean Hynes, comanager here since 2007, will succeed Owens.

ASTON/River Road Independent Value Reopens to New Investors
On Sept. 4, Aston Funds reopened ASTON/River Road Independent Value ARIVX to new investors after reallocating capacity to the mutual fund from the strategy's separate accounts. The firm still intends to close the entire strategy at roughly $1 billion in assets, which should help preserve manager Eric Cinnamond's ability to navigate the small-cap market.

Brown Capital Management Small Company
 BCSIX reopened on Sept. 4, 2012.

Peter Ehret is no longer a named manager on Invesco Premium Income PIAFX or Invesco Core Plus Bond ACPSX. Invesco Premium Income retains Ehret's 12 comanagers. Invesco Core Plus Bond is now managed by Charles Burge Jr., Claudia Calich, John Craddock, and new managers Darren Hughes and Scott Roberts.

Dean Dillard is no longer a manager on Invesco Global Health Care GGHCX. Derek Taner is now the sole manager of the fund.

Loomis Sayles Small Cap Growth LCGRX closed to new investors on Sept. 4, 2012.

JPMorgan High Yield OHYAX has capped its expense ratio as of Sept. 1, 2012. Fund expenses will not exceed 1.11% for A shares and 1.61% for C shares.

JPMorgan China Region JCHAX has capped its expense ratio as of Sept. 1, 2012. Fund expenses will not exceed 1.85% for A shares and 2.35% for C shares.

Fenimore Asset Management terminated Advisor shares of FAM Value and FAM Equity-Income on Aug. 31, 2012. The firm redesignated existing Advisor shares into Investor shares.

Virtus Global Infrastructure PGUAX will change its name to Virtus Global Dividend on Sept. 28, 2012.

Alexander Powers will retire from Columbia Management in January 2013. At that time, he will no longer be a portfolio manager on Columbia Diversified Bond INBNX or Columbia Bond CNDAX. Powers currently manages Columbia Diversified Bond with Brian Lavin, Carl Pappo, and Michael Zazzarino. Carl Pappo and Michael Zazzarino comanage Columbia Bond with Powers, and after Powers' retirement Pappo will become lead manager of Columbia Bond.

Stephen Barbaro will retire from Columbia Management at the end of 2012.  At that time, he will no longer be a portfolio manager on Columbia Small Cap Value CSMIX. Barbaro currently manages the fund with Jeremy Javidi and John Barrett.

Mutual fund analysts Michelle Canavan, Christopher Davis, David Falkof, Kailin Liu, Rob Wherry, and Gregg Wolper and ETF analyst Robert Goldsborough contributed to this report.

Morningstar fund analysts cover more than 1,700 mutual funds and write regular commentary covering fund industry news, fund investing trends, picks, portfolio planning, international investing, and more.

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