Fund firms begin announcing year-end capital gains distributions, manager Lawrence Kemp leaves UBS, and former Fairholme manager Charlie Fernandez resurfaces.
U.S.-based financial-services arm and mutual fund issuer ING U.S. finally appears headed for a public offering, according to registration documents filed late last week with the SEC.
The firm's Dutch parent, ING Groep NV ING, is gearing up to unload its U.S. operations. ING U.S., which is known for its large U.S. life-insurance business and its retirement-solutions offerings, had $445 billion in assets under management and assets under administration as of June 2012. The firm has had what it calls an "operational separation" from its parent since the end of 2011.
Now, ING U.S. is one step closer to complete independence. The filing did not provide a per-share price for the proposed offering, which would be underwritten by Goldman Sachs GS and Morgan Stanley MS. The documents indicate that the firm will go public sometime next year.
'Tis the Season for Capital Gains
It's time for fund companies to begin announcing year-end capital gains distributions. Taxes on these distributions can eat into returns, and investors should consult their fund companies' websites to check where they may be affected.
Several prominent fund companies recently announced capital gains distributions, and while many are in line with earlier years' amounts, there are a couple hefty estimated payouts on the way. While the small-cap and international funds from Longleaf Partners Funds will distribute amounts consistent in size with years past, Longleaf Partners Fund LLPFX will deliver a gain of $4.245, or roughly 16% of its $25.77 NAV. The firm sold or trimmed some of its largest contributors this year, consistent with their investment process, capturing sizable gains.
Vanguard also announced preliminary distributions, and Vanguard Capital Opportunity VHCAX, Vanguard Explorer VEXRX, and Vanguard Health Care VGHCX are set to deliver ample distributions. Vanguard Extended Duration Treasury Index VEDTX (both fund and its sibling, Vanguard Extended Duration Treasury Index ETF EDV) will also make rather large distributions.
Kemp Departs UBS
After 20 years with UBS, portfolio manager Lawrence Kemp has resigned from the bank, effective Nov. 12. UBS had subadvised the Bronze-rated Laudus Growth Investor US Large Cap Growth LGILX, and Kemp had led the team managing that fund. Now, UBS is replacing Kemp with three managers. One, Paul Graham, is head of investments at UBS Growth Investors. Kemp had worked directly under Graham. The other two managers are Sam Console and Peter Bye, both of whom had been analysts on the fund since 2002. With this change, Morningstar's Analyst Rating for the fund now is under review.
Ex-Fairholme Manager Opens Own Shop
Barnstar Fund, LLP has opened for business and launched its first hedge fund, the multidisciplinary, special situations fund Barnstar Opportunities, on Nov. 14. Charles Fernandez, firm founder and chief investment officer, is the former comanager of Fairholme FAIRX. According to the firm's press release, the new fund will invest in companies that are undervalued due to financial distress, regulatory issues, and/or unresolved litigation.
Fernandez resigned from Fairholme Capital Management, effective Oct. 17, 2011. At the time, the fund was being dragged down by large bets on out-of-favor stocks, and ended the calendar year with the worst record in the large-cap value category. (The fund's fortune has flipped for 2012, and as of Nov. 14 the fund's 26.4% year-to-date return is the category's leader.)
Fixed-income manager and head of global rates Eric Pellicciaro has left BlackRock. Bob Miller will take over his duties for global rates. In addition, Matthew Marra is no longer listed as comanager on several of BlackRock's retail fixed-income products but maintains day-to-day portfolio management responsibilities on the firm’s core fixed-income separately managed accounts. Scott MacLellan has also replaced Stuart Spodek as listed comanager on BlackRock Low Duration Bond BLDAX, working with current lead manager Tom Musmanno. Spodek remains with the firm, focusing on a multisector relative value fixed income hedge fund.
AllianceBernstein Small Cap Growth QUASX will close to new investors on Jan. 31, 2013. The fund's 18.4% annualized three-year return through Nov. 14 is in the top percentile of the small-growth peer group. The strong showing may be prompting investors to take a look, and the fund has received roughly $300 million in flows in the year to date through September 2012, bringing assets to roughly $880 million.
BNY Mellon's trustees have approved the reorganization of BNY Mellon Intermediate U.S. Government MOVIX into BNY Mellon Intermediate Bond MIIDX, effective Feb. 22, 2013. John Flahive leads both funds.
RS Investment Management, the adviser to RS Emerging Markets GBEMX and RS Greater China RSCHX, plans to ask the funds' board of trustees to take the management of the funds in-house, removing subadvisor Baillie Gifford in early 2013.
Wells Fargo's board of trustees approved the termination of Wells Fargo Advantage Core builder Series WFBGX upon redemption of all outstanding shares, which is anticipated on or before the first quarter of 2013. The fund has gathered only $15 million in assets since its April 2008 debut.
Dreyfus Select Managers Small Cap Growth DSGAX has added EAM Investors as its sixth subadvisor, allocating 20% of assets to firm.
Expenses at Columbia Value and Restructuring EVRAX, Columbia Energy & Natural Resources EENAX, Columbia Greater China NGCAX, and Columbia Small Cap Growth I CGOAX have ticked upward, rising as much as 8 basis points according to supplemental filings.
Dreyfus liquidates money funds and consolidates municipal-bond funds. Dreyfus Massachusetts Municipal Money Market, Dreyfus Pennsylvania Municipal Money Market, and Dreyfus BASIC New Jersey Municipal Money Market are set to liquidate in December. Dreyfus' board of trustees also approved the merger of Dreyfus Maryland PSMDX, Dreyfus Minnesota PSMNX, and Dreyfus Ohio PSOHX into Dreyfus AMT-Free Municipal Bond DMUAX. The three municipal-bond funds will cease accepting new investments on Nov. 26.
Dreyfus replaced Dreyfus/The Boston Company Large Cap Core DBLAX with Dreyfus Disciplined Stock DDSTX as an investment option for its three allocation funds. None of the three allocation funds invested in Dreyfus/The Boston Company Large Cap Core as of September 2012.
Brandes Investment Partners, subadvisor of Columbia International Value NIVLX, recently announced changes to its senior management and large-cap investment committee. The large-cap investment committee, which runs the International Value fund, will be split into a global and international team effective February 2013. The international committee, which manages this fund, will add Luiz Sauerbronn and Shingo Omura as voting members. Both have worked at Brandes for more than six years.
Pear Tree Columbia Micro Cap MICRX will liquidate at the end of November. The fund has been around for just over a year and has roughly $4.4 million in assets.
Warren Fisher was added as a comanager on Goldman Sachs Flexible Cap Growth GALLX.
Ryan Jacob replaced Jamie Cuellar as portfolio manager of the Jacob Micro Cap Growth JMIGX and Jacob Small Cap Growth PBSBX. Jacob is founder and CEO of Jacob Asset Management, which took over the funds after their former advisor, PineBridge, exited the mutual fund business in October 2012.
Eaton Vance Low Duration EALDX has changed its name to Eaton Vance Low Duration Government Securities and now specifies it will invest at least 80% of assets in securities issued or backed by the U.S government.
Principal removed Michael Ade and Michael Reynal as comanagers on Principal International Emerging Markets PRIAX.
Wilmington Multi-Manager International GVIEX removed Goldman Sachs Asset Management and Hansberger Global Investors as subadvisors and added Northern Cross. The fund will now use eight subadvisors.
The proposed GMO Risk Premium shuffles its expenses: The firm has reduced the purchase premium and redemption fees of 0.25% each to 0.15% each.
The board of Northern Funds approved the liquidation of Northern Global Fixed Income NOIFX for January 2013.
Mutual fund analyst Kathryn Spica and ETF analyst Robert Goldsborough contributed to this report.