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BlackRock Equity CIO Chris Leavy Takes Medical Leave

Paul Davis departs Charles Schwab Investment Management, a manager change at Ariel, and a foreign currency manager at JP Morgan exits.

Morningstar Fund Analysts, 06/20/2013

Last week, BlackRock's BLK Chris Leavy, who is the firm's chief investment officer of its fundamental stock unit in the Americas, left BlackRock on a medical leave of unspecified length to address several treatable health issues, according to a firm spokeswoman. Leavy, 42, suffers from diabetes and a related cardiovascular condition and has been advised to focus full-time on his health issues before coming back to work.

Leavy joined BlackRock in 2010 from OppenheimerFunds. Since that time, he has worked to better the performance of BlackRock's actively managed stock funds.  Some of his most significant moves have involved hiring several big-name portfolio managers, including Bartlett Geer and Lawrence Kemp. He also has assumed oversight of the firm's large-cap stock funds that previously had been overseen by Bob Doll, who now is with Nuveen.

As part of Leavy's leave of absence, he has stepped down--at least, temporarily--from the four funds he has comanaged, including the $880 million BlackRock Large Cap Value MALVX and the $1.7 billion BlackRock Large Cap Core MALRX. In Leavy's absence, longtime comanager Peter Stournaras will manage the funds solo. Meanwhile, Leavy's CIO responsibilities will be handled during his absence by Quintin Price, the global head of BlackRock's actively managed strategies. Leavy reports to Price.

Charles Schwab Portfolio Manager Departs to Start Own Firm
Management changes continue to occur at Charles Schwab Investment Management, where Paul Davis, who had helped to manage the firm's roughly $5.6 billion in disciplined active equity products, is leaving the firm to start his own company.

Working alongside comanager Jonas Svallin, Davis had been at the helm of a raft of actively managed funds, including Schwab Core Equity SWANX. Davis stepped down on June 14. To replace Davis, Schwab has promoted Wei Li, whom the firm hired in 2012, to become a comanager alongside Svallin.

Charles Schwab Investment Management, the asset management arm of the Schwab brokerage, has been in a rebuilding mode in recent years, bringing in a number of outside investment professionals in response to the fallout from the financial crisis and allegations that it made misleading statement regarding the YieldPlus Fund. Those allegations culminated in a $118 million settlement with the SEC. While only the 45th-largest provider of long-term mutual funds and 10th-largest provider of exchange-traded funds, Schwab holds considerable sway in the industry due to the popularity of its brokerage platform with independent financial advisors.

Personnel changes at the firm have occurred at all levels of the organization. In 2010, Marie Chandoha joined as chief investment officer and later added the chief executive officer title. In 2011, Omar Aguilar was added to head both passive and active equities. Agnes Hong, who joined the firm in 2009, leads the passive equity team, including both index mutual funds and ETFs. Larry Mano, who has been a listed portfolio manager on several Schwab index funds as far back as 1999 and had worked alongside Davis, announced his retirement in February.

Ariel Focus Comanager Focuses His Efforts Elsewhere at the Firm
Tim Fidler has stepped back as a comanager of Ariel Focus ARFFX, leaving Charlie Bobrinskoy as the $50 million fund's lone manager. Both Fidler and Bobrinskoy, Ariel's director of research, have managed the fund since its 2005 inception.

Fidler will continue to comanage the $1.7 billion, Bronze-rated Ariel Appreciation CAAPX alongside the firm's founder, chairman, and chief investment officer John W. Rogers Jr. Both Rogers and Bobrinskoy serve as research generalists, while Fidler specializes in covering the financial services industry. Fidler's move to now comanage just one fund--in addition to industry-specific research--was designed to keep the range of his responsibilities in line with those of Rogers and Bobrinskoy, according to a letter sent to the firm's institutional clients.

Foreign Currency Manager Exits JP Morgan
Portfolio manager Jon Jonsson will be leaving JP Morgan. Jonsson had worked at JPMorgan for 15 years and had been the lead manager on JPMorgan International Currency Income JCIAX since its 2007 inception and JPMorgan Ex-G4 Currency Strategies EXGAX since it was launched in 2011. The International Currency fund had attracted over $1 billion in assets and had received a Bronze Analyst Rating from Morningstar's fund analysts, which is now under review. For both funds, comanager Iain Stealey will remain on board as the sole manager. Stealey joined JP Morgan 11 years ago and has focused on currency strategies during that time. He was only recently named a comanager on both funds in May 2013, but he has managed European-sold fixed-income strategies since 2006. He also has run a portion of JPMorgan Multi-Sector Income JSIAX since its 2010 inception.

RiverPark High-Yield Fund Closes to New Investors
RiverPark Short Term High Yield RPHYX will close to new investors at the end of the trading day on June 21, less than three years after its inception. The fund saw more than $590 million in inflows during the trailing year, according to Morningstar estimates. It now holds more roughly $740 million in assets. Capping its asset base before size becomes an issue, rather than after, marks a shareholder-friendly move for the fund.

Eaton Vance Launching New Foreign Currency Fund
Eaton Vance is preparing to launch a new foreign currency fund run by the comanager team from Eaton Vance Global Macro Absolute Return EAGMX. The firm filed documents to launch Eaton Vance Currency Income Advantage, which will invest in bonds denominated in foreign currencies, derivatives that are sensitive to currencies and interest-rate changes in foreign countries, precious metals, and commodities. The fund's comanagers will be John Baur, Michael Cirami, and Eric Stein, who have led the firm's $6.8 billion absolute return fund since late 2012--though their tenures at Eaton Vance date back to the early 2000s. Baur and Cirami also comanage Eaton Vance Diversified Currency Income EAIIX and Eaton Vance Emerging Markets Local Income EEIAX.

DWS Adding Income-Focused Offering to its Real Estate Lineup
DWS has filed documents to launch an income-focused real estate fund. DWS RREEF Real Estate Securities Income will be comanaged by John Robertson, Jerry Ehlinger, and John Vojticek; seasoned members of Deutsche Asset and Wealth Management's RREEF real estate division. The trio also manages DWS RREEF Real Estate Securities RRRAX and works with a broader team managing DWS RREEF Global Real Estate Securities RRGAX. Whereas the two existing funds aim for total return, the new offering will focus on higher current income, according to the filing.

Fund analysts David Falkof, Flynn Murphy, Michael Rawson, and Kathryn Spica 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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