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2 Yacktman Funds to Slow Inflows

Bill Gross adds management duties on PIMCO Unconstrained Bond while its longtime manager is on a sabbatical, Arif Husain taking over T. Rowe Price International Bond, and more. 

Morningstar Fund Analysts, 12/05/2013

Yacktman YACKX and Yacktman Focused YAFFX, which have Morningstar Analyst Ratings of Gold and Silver, respectively, will close to new investors after Dec. 30, 2013, according to a filing on Monday from the fund's advisor, Managers AMG Funds. Existing shareholders may continue to buy shares in both funds. Additionally, the minimum initial investment in Yacktman Focused's institutional share class has been lowered to $100,000 from $1 million.

The decision to close the funds follows five years of tremendous asset growth. Yacktman's asset base was about $300 million five years ago and Yacktman Focused's was well below $100 million. Now the two funds have $25 billion in combined assets and nearly $30 billion firmwide. The funds benefited from strong equity markets since then, as well as robust inflows following excellent relative performance in 2008 and 2009, and again in 2011. Over the past five years, Yacktman has collected an estimated $9.2 billion and Focused has absorbed $8.5 billion.

Inflows have remained fairly strong even as performance has slowed the past two years. Both funds are on pace for their second consecutive bottom-quartile calendar-year finishes relative to large-blend peers. Returns have lagged as both funds have built 20% cash stakes, which helped limit losses during the 2007-09 credit crisis. With equity valuations at lofty levels, the team has had a difficult time finding new bargains.

Gross Stepping in as Manager on PIMCO Unconstrained Bond Fund
On Thursday, PIMCO announced that the firm's founder and co-chief investment officer, Bill Gross, will take over as the named portfolio manager on the $28 billion, Bronze-rated PIMCO Unconstrained Bond PUBAX.

The fund's manager since its 2008 inception, PIMCO veteran Chris Dialynas, has announced that he is taking a sabbatical beginning in the second quarter of 2014, and the management change has been made in preparation of Dialynas' absence. PIMCO did not specify how long of a leave that Dialynas, 59, will take.

We do not expect any changes to this fund, particularly as Gross already has been a member of PIMCO's unconstrained strategy management team, along with Dialynas and three others at the firm. Each of those five team members already runs unconstrained portfolios shaped by the group.

Husain to Take Over T. Rowe Price International Bond
Arif Husain will replace Ian Kelson at Neutral-rated T. Rowe Price International Bond RPIBX on Jan. 1, 2014. Kelson, who's run the $4.9 billion fund since 2001, started stepping back from his responsibilities earlier this year when Husain was hired to replace him as head of international fixed income. Kelson isn't completely retiring, though. He'll remain a member of the firm's asset-allocation committee and will continue working with analysts. Husain, a hire from AllianceBernstein, has worked closely with Kelson since joining the firm in August. Chris Rothery, who joined T. Rowe Price in 1994, remains a comanager on the fund.

ING Funds to Get Voya Moniker in 2014
ING U.S. VOYA, which went public as Voya Financial in May 2013 as part of its split from Dutch parent ING Group ING, announced in prospectus amendments earlier this week that it will be proceeding with the expected rebranding of its mutual fund lineup. There will be some differentiation between funds managed internally by ING and those run by external subadvisors. Internally run funds will be part of the Voya family, while third-party funds will use the abbreviation "VY." For the funds on its retirement platform, ING uses an extensive network of external subadvisors  including T. Rowe Price, PIMCO, and Oppenheimer. 

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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