A new manager for T. Rowe Price New Era, DWS fires a subadvisor, Matthews launches 2 Asia funds and makes manager changes on 2 other funds, Cohen & Steers founders pull back, and a Waddell & Reed bond manager to retire.
American Century, the Kansas City-based investment firm, announced today that it would be removing the Livestrong name from its series of target-date funds, effective May 31, 2013. The name change comes on the heels of the admission of doping this past January by cyclist Lance Armstrong, who founded the Livestrong Foundation to promote cancer research. American Century has been associated with the Livestrong Foundation and has used its name on its target-date funds since 2006.
Going forward, American Century plans to group its target-date funds under the One Choice name, a brand already in use for the firm's target-risk funds. Although American Century is touting the name change as a move to simplify and consolidate its retirement offerings, it's unsurprising the firm is choosing to distance itself from the tainted Livestrong brand in the wake of Armstrong's highly publicized admission. American Century is not the first Kansas City-based organization to dissociate itself from the Livestrong brand. Earlier this year, the Sporting Kansas City professional soccer team, whose stadium was formerly known as Livestrong Stadium, terminated its contract with the Livestrong foundation and removed the name from the stadium.
Although this name change may take away a recognizable aspect of this target-date series' branding, it has no effect on the investment capabilities or merit of the funds. American Century's target-date funds receive a Bronze rating from Morningstar, and they've produced both strong performance and healthy asset growth. As of March 31, 2013, the Livestrong funds were the 10th-largest series of target-date mutual funds, with $7.6 billion in assets under management.
Manager Change at T. Rowe Price New Era
T. Rowe Price announced last week that Tim Parker, the manager of Neutral-rated T. Rowe Price New Era PRNEX, is leaving the firm and will be replaced by Shawn Driscoll. Driscoll will transition into the role before taking full responsibility by Sept. 30, 2013, at the latest. The announcement is somewhat of a surprise, considering that Parker has managed the fund only since June 2010 and has generated decent results during that time. While Driscoll has been an analyst on the fund since 2006, this will be his first lead-manager assignment. He has managed a sliver of the firm's institutional, analyst-run U.S. Structured Research portfolio, though, which is similar to T. Rowe Price Capital Opportunity PRCOX. As an analyst, Driscoll has covered many of the major natural resources subsectors including coal, exploration and production, mining equipment, metals, agriculture, engineering and construction, and industrial gas companies. The transition will be used to get him up to speed on those subsectors with which he's less familiar, including oil majors, energy services, and refiners.
The fund will likely become even more growth-oriented and opportunistic than it had been under Parker. During the past three years, Parker has turned the fund into more of a pure natural-resources offering than it had been under prior manager Charles Ober, cutting back on the less-commodity-sensitive oil majors for greater exposure to exploration and production and industrial-materials companies. He has also been more willing to trade around positions than Ober was, increasing annual turnover to roughly one third from the teens. Driscoll will likely push further in that direction, as he doubts that commodity prices will offer the same tailwind that they had in the 2000s, which makes it even more important to be valuation-sensitive and to take profits as they come. He predicts that turnover will increase to 50% or so, which is still below the 77% category average. Driscoll also plans to be more growth-oriented than Parker, looking for companies that are growing revenues rather than those that look cheap relative to their reserves.
Although none of this amounts to a radical strategic overhaul, any manager change creates unknowns. Those are perhaps exacerbated in this case given that Driscoll doesn't have a track record of his own.
DWS Drops Quant Subadvisor QS Investors
DWS is terminating subadvisor QS Investors and bringing a number of funds under in-house management, starting in May 2013. QS Investors served as in-house quantitative group in Deutsche Bank's asset-management arm and was spun-out as an independent entity in 2010. The firm currently subadvises 16 DWS mutual funds.
This change fits a larger trend. After DWS' parent, Deutsche Bank, opted not to sell the asset manager in 2012, DWS has embarked on a growth plan that includes reshuffling internal investment staff. Along the way, the firm has been cutting ties with some subadvisors. In January 2013, DWS fired subadvisor (and former DWS manager) Oliver Kratz and his firm Global Thematic Partners from DWS Global Growth SGQAX.