T. Rowe Price readies an ultra-short bond fund, and David Resnick finally arrives at Third Avenue.
Legg Mason surprised some analysts with the announcement that chairman and CEO Mark Fetting will step down on Oct. 1. There had been no apparent signs that Fetting--just the second chief executive in Legg Mason's 36-year history--was heading for the exit. After Fetting's departure, lead independent director W. Allen Reed will step in as nonexecutive chairman, and Joe Sullivan, head of Legg Mason's global distribution, will become interim CEO until the board appoints a permanent chief executive.
During his tenure as president and CEO, which began in January 2008, Fetting oversaw a tumultuous period for the firm. Performance slumped badly at flagship fund Legg Mason Capital Management Value
Asset flows have stabilized more recently as investors continue to put money into Legg Mason's fixed-income offerings, including Legg Mason Brandywine Global Opportunities Bond
Fetting will remain with the firm as a consultant through year-end. For now he will also retain his position on the boards of Legg Mason Capital Management and Royce & Associates.
T. Rowe Dives Into Ultra-short Bond Territory
T. Rowe Price has filed to launch its first ultrashort bond fund in December. The proposed fund would provide a higher-risk alternative to investors who aren't satisfied earning minuscule yields on traditional money market funds. The fund will be managed by one of the firm's experienced money market managers, Joseph Lynagh, who also runs T. Rowe Price Prime Reserve (
This marks the third ultra-short fund launch of the year, following a busy 2011 when Fidelity, Oppenheimer, Putnam, and Pioneer all launched ultrashort bond funds. The category hemorrhaged assets during 2008's subprime crisis, but since then has grown to roughly $45 billion, from a low of $18 billion in December 2008. Meanwhile, more than $1 trillion has left money market funds over this time frame, according to Morningstar estimates.
The median 12-month yield for the ultrashort bond category is currently 1.0%, but that additional income over near-zero money market yields comes with added risk. The typical taxable money market fund adheres to the stable $1 net asset value convention and has an average effective maturity of three months and an average effective duration of just 0.17. The typical ultra-short bond fund, however, has an average maturity of more than two years and an average duration of 0.67 years.
Distressed Investing Vet Officially Joins Third Avenue
On Sept. 11, Third Avenue Management announced that David Resnick has officially joined Third Avenue as president and a member of the firm's investment team. Resnick--who previously had served as chairman of Rothschild Inc.'s Global Financing Advisory practice--has considerable experience working on restructuring and bankruptcies, including advising the board of AIG
Rabobank Nearing Sale of Robeco
Rabobank, the Netherlands' largest retail bank, is preparing to sell its asset-management arm Robeco, with final bids due later this month, according to a Reuters report on Sept. 7.
Any sale of Robeco, which could reap as much as €2 billion, according to the report, also would include mutual fund firm Harbor Capital Advisors, which has more than $66 billion in mutual fund assets. Robeco acquired Harbor Capital in 2001.
Reuters reported that both asset managers and private equity firms may bid for Robeco. Final bids for Robeco reportedly were due on Sept. 18.
ING Appoints New Head of Manager Selection
ING Investment Management has replaced Bill Evans with Halvard Kvaale as head of manager research and selection and as a portfolio manager on the firm's target-date, target-risk, and multiasset fund lineup. For his part, Evans had overseen the selection and retention of some well-regarded subadvisors, including PIMCO's Bill Gross and Christopher Davis of the Davis Funds. However, ING's target-date funds' performance has been middling over time, affected in part by in-house fixed-income and enhanced-index offerings that struggled in 2007-08, followed by performance troubles with several of its third-party subadvisors.
The incoming Kvaale previously worked for Morgan Stanley Smith Barney Consulting Group as managing director and head of the portfolio advisory services group. At ING, Kvaale will work with Paul Zemsky, who remains in place as the firm's head of multiasset strategies.
GMO Boosts Asset-Allocation Ranks From Within
GMO is shuffling managers in a move designed to bolster its growing asset-allocation team and better link that group with the firm's quantitative equity division. Sam Wilderman, who had served as co-head of GMO's quantitative equity team, will move to the firm's asset-allocation team, working with Ben Inker as a comanager of funds such as GMO Global Asset Allocation III
Hancock won't be left without a partner however. David Cowan, a research analyst for the firm's quantitative equity team since 2006, will join Hancock as a co-director of the quantitative equity division. Whereas Wilderman and Hancock had split equity research between domestic and international stocks respectively, the new team setup will take a global focus without dividing research by geographic region.
Sentinel has named Andrew Boczek a comanager of Sentinel International Equity
Todd Brux is no longer a managing director for RBC Global Asset Management and he no longer comanages Access Capital Community Investment
Randall Greer is no longer a comanager of Tributary Small Company
Turner Funds' board of trustees approved the reorganization of Turner Concentrated Growth
The assets of Wilmington Pennsylvania Municipal Bond
Associate directors of fund analysis Bridget Hughes and Miriam Sjoblom, senior mutual fund analyst Josh Charlson, ETF analyst Robert Goldsborough, and mutual fund analyst Flynn Murphy contributed to this article.