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Gaffney Leaves Loomis Sayles for Crosstown Rival

PIMCO rolls out a mortgage-related fund, ING renames its greater China fund and alters its strategy, and Goldman Sachs to shut down three emerging-markets single-country funds.

Morningstar Fund Analysts, 10/25/2012

Kathleen Gaffney, comanager of the $22 billion Loomis Sayles Bond LSBRX, has departed for Boston-based rival Eaton Vance EV. Gaffney's nearly three-decade career at Loomis Sayles included comanaging Loomis Sayles Bond since 1997 alongside legendary bond investor Dan Fuss.

Given her lengthy tenure and public prominence, Gaffney's departure raises questions about the 79-year old Fuss' succession plans. Fuss, who pioneered the Bond fund's unique benchmark-agnostic approach, remains actively involved in the day-to-day management of Loomis Sayles Bond and several sibling portfolios and has no immediate plans to retire.

Although Gaffney will be missed, the success of the Bond fund has depended on more than one or two individuals for some time. Fuss continues to work closely with Matthew Eagan and Elaine Stokes, both Loomis Sayles veterans who have comanaged the Bond fund since 2007. The two report to chief investment officer Jae Park, who has built out the firm's investment staff and resources over the past several years, with a focus on risk-management, macroeconomic research, and securitized assets. Eagan, Fuss, and Stokes also draw on the work of 40 credit analysts.

As a result, it's unlikely that Gaffney's departure will cause big changes at Loomis Sayles Bond. The strength of the remaining management team and its proven knack for uncovering value across global bond markets still support its Morningstar Analyst Rating of Gold.

Gaffney joins Eaton Vance as co-director of investment-grade fixed income with Tom Luster, and she will report to Payson Swaffield, the firm's chief investment officer for fixed income. Gaffney has not been named on any existing Eaton Vance portfolios, but Swaffield notes that plans for a multisector-bond offering headed by Gaffney are in the works. Eaton Vance's current lineup includes one multisector fund, Eaton Vance Strategic Income EVSGX, which invests in a pool of other funds managed by the firm. Swaffield reports that Gaffney will have individual bond-picking responsibility at her new charge.

PIMCO Launches Mortgage-Related Fund
PIMCO has launched PIMCO Mortgage Opportunities PMZIX, a nondiversified fund specializing in mortgage-related securities. Three portfolio managers are comanaging the strategy: Alfred Murata, who recently joined PIMCO GNMA PDMIX as a comanager, Daniel Hyman, who runs the firm's Canadian offering PIMCO Monthly Income, and Joshua Anderson. The fund's duration will range from negative 1.0 year to 8.0 years, and the managers will have the discretion to invest as much as half the fund assets in high-yield fare.

ING Changes Fund Strategy and Managers
ING is changing the name, strategy, and management team at ING Greater China IFCAX. Starting Nov. 15, the fund will be called ING Emerging Markets Equity Dividend and will invest at least 80% of assets in dividend-producing emerging-markets equity securities. A Netherlands-based management team, including Nicolas Simar, who runs ING Global Equity Dividend IAGAX; Manu Vandenbulck; and Robert Davis, will take over from the Hong Kong-based team currently in charge.

Goldman Sachs Closing Emerging-Markets Country Funds
Goldman Sachs plans to shut down Goldman Sachs Brazil Equity GZIAX, Goldman Sachs Korea Equity GWIAX, and Goldman Sachs Indian Equity GIAAX. The funds have struggled to attract assets since their launches in spring 2011; the firm will liquidate them at the end of November.

More Manager Changes at Fidelity
Fidelity continues to reshuffle the ranks at its sector funds. In addition to several changes, which Fund Times reported about last July, three managers have stepped off sectors funds to concentrate on running other offerings.

Charlie Chai, who took over Fidelity Select Communications Equipment FSDCX and Fidelity Advisor Communications Equipment FDMAX in 2003, has stepped down. Ali Khan, who joined Chai as a comanager at both funds in January 2012, will remain as sole manager. Chai will continue to manage his other fund, Fidelity Select Technology FSPTX.

Dan Kelley, who has run Fidelity Select Construction & Housing FSHOX since 2007, has stepped down to focus on Fidelity Trend FTRNX, which he took over in January 2012. Holger Boerner, Kelley's comanager at Construction & Housing since January, will remain on the fund as sole manager.

John Sheehy has left Fidelity Select Defense & Aerospace FSDAX to run Fidelity Select Banking FSRBX, which he took over in January 2012. Douglas Scott, who joined Defense & Aerospace in January as a comanager, will succeed Sheehy as sole manager.

Eaton Vance has filed to launch Eaton Vance Institutional Emerging Markets Local Debt Strategy. Mark Venezia and his comanagers, John Baur and Michael Cirami, who together run Eaton Vance Global Macro Absolute Return EAGMX, will head the offering.

Jason Inzer has stepped off DWS International SCINX, DWS Emerging Markets Equity SEMGX, and DWS Equity Dividend KDHAX, a year and a half after he and comanager Thomas Voecking replaced the fund's previous management teams in spring 2011. Voecking will remain onboard and will be joined at all three funds by Anna Wallentin, Juergen Foerster, and Johannes Prix. Inzer's departure is at least the seventh manager departure in the past five years for each of the three funds.

Forward Funds plans to liquidate Forward CorePlus AGROX on Dec. 17.

Damon Ficklin has joined Polen Growth POLIX alongside current manager Dan Davidowitz.

Morgan Stanley has received shareholder approval for its plan to merge Morgan Stanley Mid Cap Growth DGRAX into Morgan Stanley Institutional Mid Cap Growth MSKHX. The merger is part of a broader initiative aimed at paring down the firm's fund lineup, as Fund Times reported last July.

Senior mutual fund analyst Sarah Bush, mutual fund analyst Shannon Kirwin, 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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