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Longleaf Global Launches for U.S. Investors

Virtus closes its emerging-markets opportunities fund to new investors, Franklin closes its remaining insured muni funds to new investors, and a high-ranking executive leaves Vanguard.

Morningstar Fund Analysts, 01/10/2013

On Jan. 2, Southeastern Asset Management rolled out its first U.S. open-end fund since 1998 and its first global mutual fund ever available in the United States. The new fund is Longleaf Global LLGLX, a concentrated fund that invests at least 40% of its assets outside the U.S. A version of the strategy already is available in Europe.

Mason Hawkins and Staley Cates, who received Morningstar's Domestic-Stock Fund Manager of the Year award in 2006, manage the fund. Like other Longleaf funds, the portfolio targets holding between 15 and 25 companies. The fund will have an unconstrained portfolio that invests in companies of all market capitalizations and geographies. Its expense ratio is capped at 1.65%.

Sibling funds Longleaf Partners LLPFX and Longleaf Partners Small-Cap LLSCX receive Morningstar Analyst Ratings of Gold while Longleaf Partners International LLINX is rated Bronze.

Quant Leader Departs Vanguard
Vanguard announced that the firm's principal and head of equities, Sandip Bhagat, will be leaving the firm to pursue other interests. Bhagat, 52, joined Vanguard's quantitative equity team from Morgan Stanley in January 2009 when he was recruited by Vanguard's then-chief investment officer Gus Sauter (Sauter has recently retired from the firm, as previously announced). No replacement has been announced yet for Bhagat.

Virtus Emerging Markets Opportunities Closes After Strong Inflows
Virtus announced it will close Virtus Emerging Markets Opportunities HEMZX to new investors on Feb. 1. The Silver-rated fund has collected strong inflows in recent years, ending 2012 with more than $6.8 billion in assets. Manager Rajiv Jain was named Morningstar International-Stock Fund Manager of the Year for 2012, following a superb year driven in large part by strong stock-picking in India. In three of the past five calendar years the fund has outpaced more than 95% of its peers (it landed in the bottom decile of its category for 2009, despite a 48% return for the year, and placed in the top half of the category in 2011).

Franklin Closes Insured Muni Funds
Franklin Templeton has announced that it will be closing its two remaining insured muni funds, Franklin Insured Tax-Free Income FTFIX and Franklin California Insured Tax-Free Income FRCIX. The funds will close to new investors on Jan. 18 and to additional investments from existing shareholders on March 1.

The company has not said what it has in mind next for the two funds, which are among the very last insured muni strategies still on the market. It already merged two other insured muni portfolios, a Florida and a New York fund, into existing offerings in 2008 and 2010, respectively.

The challenges of running a successful insured muni portfolio have multiplied since the 2008 financial crisis, which felled all but one of the market's seven major bond insurers and sapped public confidence in the value of muni insurance. With Assured Guarantee the only insurer left in town, sourcing insured bonds is increasingly difficult; the fraction of new muni issuance sporting an insurance wrapper has shrunk to roughly 5% from more than 50% in precrisis days. Besides the two Franklin funds, Morningstar's database lists just one other insured muni strategy left on the market--the $8 million Shelton California Insured Intermediate CATFX.

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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