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Investing in Future, Oakmark Select Adds 2 Comanagers

DWS announced that it is dropping the name of subadvisor Dreman from three mutual funds, while Vanguard removed Hansberger from a team of subadvisors running Vanguard International Value.

Morningstar Fund Analysts, 01/17/2013

Harris Associates has announced that two comanagers will be joining the Gold-rated Oakmark Select OAKLX alongside longtime steward Bill Nygren. Win Murray, Harris Associates' director of U.S. equity research, and senior research analyst Tony Coniaris will officially join Nygren in running the large-cap blend fund on Jan. 28.

The announcement was not unexpected. On July 31, 2012, longtime comanager Henry Berghoef, who had assisted Nygren in managing the fund since 2000, stepped down. Harris stated at the time that it planned to appoint a successor by May 2013.

It's likely that the two new comanagers will act primarily as assistant managers to Nygren for now. That means that investors shouldn't expect a change to the contrarian and concentrated style that has driven the fund's appeal and impressive long-term record. (The fund's annualized 15-year return of 9.0% tops all but one competitor in Morningstar's large-cap blend category.)

Still, Nygren emphasized that the decision to add Murray and Coniaris was made with an eye to the fund's long-term stewardship. In a statement, he said, "While I expect to be at Oakmark for many more years, we need to think about succession for the funds ... Win and Tony are both younger than I am, and bringing them in as co-managers now will ensure investment continuity for Select far into the future."

Legg Mason to Combine Operations of LMCM and ClearBridge
Click here to see our special Fund Times item from Wednesday about Legg Mason's plans to bring together the operations of two of its investment unit subsidiaries, ClearBridge Investments and Legg Mason Capital Management. While the move is not expected to have an immediate impact on any existing ClearBridge or Legg Mason Capital Management mutual funds, it's noteworthy that legendary Legg Mason Capital Management portfolio manager Bill Miller will not be becoming part of ClearBridge.

DWS Drops Dreman Name, Global Thematic Account
DWS is changing the names of its three Dreman Value Management-run funds, including the Neutral-rated DWS Dreman Small Cap Value KDSAX, to drop the subadvisor's name. Dreman's assets under management have shrunk dramatically to just $4.1 billion today from $20 billion in 2007. The firm previously subadvised a large-cap value fund for DWS but was dropped after that fund (now called DWS Equity Dividend KDHAX) lost 46% in 2008, leading to massive outflows. The three funds Dreman subadvises for DWS now account for roughly half of the firm's total assets under management.

Meanwhile, DWS announced a management change at DWS Global Thematic SGQAX effective Jan. 31, at which point its name will change to DWS Global Growth. The firm is replacing manager Oliver Kratz and his firm, Global Thematic Partners, with an in-house team. When Kratz began running the fund in August 2003, he worked directly for the fund's advisor, Deutsche Asset Management, but in 2010 he and his entire analyst team left Deutsche to start Global Thematic Partners, continuing to run this fund on a subadvisory basis. Though his theme-based approach led to category-topping returns in 2005 and 2006, the fund has had inconsistent performance since then. The fund's new leadership combines three members of its New York-based global small-cap team with the Frankfurt-based global growth team behind DWS Top 50 Welt, a fund offered to European investors. The lead manager will be Joseph Axtell, manager of DWS Global Small Cap Growth KGDAX.

Longtime Thornburg Manager Retires
George Strickland, portfolio manager of the 3-star Thornburg Strategic Income TSIAX, will be retiring from Thornburg after 21 years of employment effective Feb. 1, 2013. Jason Brady, his co-portfolio manager since the fund's 2007 inception, will remain on board and there are no plans to add to the portfolio management team at this time. Strickland is a managing director of the firm and was also co-portfolio manager of the Thornburg Municipal Bond Strategies until 2010.

Vanguard Drops Hansberger
Vanguard has removed Hansberger Global Investors from the team of subadvisors running Vanguard International Value VTRIX. The change comes several months after Vanguard's decision last August to drop AllianceBernstein from the fund, replacing it with ARGA Investment Management. Vanguard isn't appointing a replacement for Hansberger at this time. Going forward, ARGA will run 24% of the fund's assets, while Edinburgh Partners will manage 34% and Lazard Asset Management will run 39%. (The remainder will be in cash investments.)

Artisan Reshuffles Management Teams and Launches a New Fund
Barry Dargan, who joined Artisan three years ago from MFS to lead the then-new Artisan Global Equity ARTHX with Mark Yockey, has left the firm after a brief but category-topping run. (The fund's 14.3% annualized return since its 2010 inception beat 97% of world-stock peers.)

Dargan's hire was unusual at the time, given Artisan's historical preference for promoting analysts from within to run funds. Indeed, the two comanagers who have joined the fund to replace him, Andrew Euretig and Charles-Henri Hamker, are both longtime analysts. Both were recently promoted to associate portfolio manager positions alongside Yockey at Artisan International ARTIX in 2012. Hamker also joined Artisan International Small Cap Investor ARTJX.

The news comes alongside Artisan's announcement that it plans to launch a new fund, Artisan Global Small Cap, in March 2013. Yockey will manage the fund alongside Hamker and David Geisler.

Fidelity Closes Small-Cap Fund
Silver-rated Fidelity Small Cap Discovery FSCRX, which has been the top-performing small-blend fund since Chuck Myers took over in 2006, is closing to new investors after Jan. 31. Given its success, it's no surprise that the fund has seen huge inflows during the past several years; its assets have grown to $3.9 billion as of December from $245 million in 2006. Myers also runs the $3.1 billion Fidelity Small Cap Value FCPVX, which has also performed well but hasn't experienced the same velocity of flows as Discovery. There are no plans to close that fund, but Myers will be getting some help: Research analyst Derek Janssen joined as a comanager as of Jan. 1.

Janus Launches New Fund
Janus has filed to launch a new fund, Perkins International Value, which will be run by Greg Kolb. Kolb has run the Bronze-rated world-stock fund Perkins Global Value JNGOX since 2001. At that time, the fund was called Janus Global Opportunities and was housed at Janus. However, in 2010 Kolb left Janus's Denver headquarters to join the firm's value-oriented subsidiary Perkins Investment Management in Chicago, taking the fund with him. Since the move, he's bulked up his research resources, adding two international stock analysts to his team.

Litman Gregory Adds Subdvisors
Litman Gregory has added Wellington Management Company and Lazard Asset Management to the subadvisor roster at Gold-rated Litman Gregory Masters International MSILX, raising the fund's total number of subadvisors from five to seven. These additions follow Litman Gregory's removal of Mastholm Asset Management from the fund's subadvisor lineup in May 2012. The Wellington team will employ a growth strategy here--as the Mastholm squad did--while the Lazard team will take a blend approach.

Associate directors of fund analysis Bridget B. Hughes, CFA, and Shannon Zimmerman, senior fund analysts Greg Carlson, Katie Rushkewicz Reichart, CFA, William Samuel Rocco, and Gregg Wolper, and fund analysts Michelle Canavan, Robert Goldsborough, and Shannon Kirwin 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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