Federated to make changes to its equity fund lineup, and Eaton Vance Atlanta Capital SMID-Cap to close to new investors.
Kent Stahl and Gregg Thomas will be added as comanagers of Hartford Capital Appreciation ITHAX in March 2013 as the fund prepares for lead manager Saul Pannell's eventual retirement. Pannell, a manager with Wellington Management--the fund's subadvisor--has not announced when he will step down. The new managers will initially run 10% of the fund, although they are expected to fully take over by early 2014.
The impact may not be felt immediately, but over time the manager transition process could signal a significant change for the fund. Stahl oversees Hartford Capital Appreciation II HCTAX, a multimanager fund where he selects Wellington managers to run slices of the portfolio. Stahl does not pick stocks for the fund.
Pannell has run Capital Appreciation since its 1996 inception, building a record that has topped the large-blend category during his tenure. He uses a highly active, flexible approach spanning the market-cap spectrum and investing heavily overseas. Hartford Capital Appreciation II also invests in small-cap and international stocks, but it's much more diversified and historically has only had one fourth to one third of its holdings in common with Hartford Capital Appreciation.
Federated Shuffles Part of Equity Fund Lineup
Federated is throwing in the towel on Federated Capital Appreciation FEDEX and Federated Mid Cap Growth Strategies FGSAX. The funds have struggled to keep pace in recent years, with both posting bottom-decile results for the trailing three-year period through Dec. 18, 2012. Pending shareholder approval, Federated Capital Appreciation will merge into Federated Equity-Income LEIFX, and the firm's quantitative strategy group, MDT Advisers, will take over Federated Mid Cap Growth Strategies. Manager James Grefenstette is currently on his second tour of duty leading both funds, having departed Federated in 2006 to join an investment boutique before returning at the end of 2009. While he's expected to stay on board during the funds' transition, other teams will be responsible for each of the funds going forward.
In addition, Federated will revamp Federated Prudent Absolute Return FMAAX. Doug Noland, manager of the bear market fund Federated Prudent Bear BEARX and Federated Prudent DollarBear PSAFX, will step off Federated Prudent Absolute Return, and Federated also will drop "Prudent" from FMAAX's name. The fund has long struggled to find itself. In 2009 it shifted categories to world allocation from conservative allocation, and in 2012 it wound up in the market-neutral bucket. The firm brought Noland on board this fund in late 2010, but the bear market manager was unable to revive this strategy. The fund's 1.9% loss for the trailing two-year period is in the market-neutral category's bottom quartile. Manager Dana Meissner will remain and will lean more on the firm's house macroeconomic calls.
Eaton Vance Fund Closing to New Investors
Eaton Vance Atlanta Capital SMID-Cap EAASX is closing to new investors on Jan. 15. The $3.4 billion fund has seen assets under management grow by more than 400% in the trailing three years. The fund took in roughly $1.2 billion in just the past year, according to Morningstar asset flow data. The fund has been a strong performer in recent years. Though its trailing one-year return through Dec. 18 falls in the middle of the mid-growth pack, the fund's 8.9% annualized return during the trailing five years ranks in the category's top percentile.
ING Small Company Reopens
ING Small Company AESAX has reopened. The fund had closed to new investors in February 2011, when it held roughly $378 million in assets. Assets have increased to $386 million as of November 2012. The fund's trailing three-year returns lag more than 70% of its small-blend peers.
Aston Fires Subadvisor
Aston Asset Management has fired Todd-Veredus Asset Management, the subadvisor to two of the firm's small-cap funds. The $22.8 million Aston/Veredus Small Cap Growth VERDX will be merged into Aston Small Cap Growth ACWDX, which is subadvised by Lee Munder Capital Group and managed by Andrew Morey. Until the transaction is approved and finalized, Aston/Veredus Small Cap Growth will change its name to Aston Small Cap and become a clone of Aston Small Cap Growth. The $6.2 million Aston/Veredus Select Growth AVSGX will be liquidated.
The Veredus subadvised funds have struggled with performance in recent years. Both funds lagged more than 90% of their respective category peers in the trailing five years through November.
IShares Altering Benchmark Indexes for 11 Country-Specific ETFs
In February, iShares will swap benchmarks at 11 of its country-specific exchange-traded funds. The funds' bogies will switch from MSCI country indexes to MSCI 25/50 country indexes. While both indexes are market-cap weighted, the 25/50 benchmarks limit the weight of any single holding to 25% of index. Additionally, the sum of all components with a 5% or greater weight cannot exceed a maximum of 50% of the weight of the 25/50 indexes.
Senior mutual fund analysts Greg Carlson and Katie Rushkewicz Reichart, mutual fund analysts Flynn Murphy and Kathryn Spica, and ETF analyst Robert Goldsborough contributed to this report.