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Veteran Manager Stepping Down From Vanguard Explorer

Also, Bill Miller draws up plans for a go-anywhere income fund, Ken Feinberg to retire from Davis Funds at the end of the year, Perritt Capital plans a new fund, and a goodbye to Abe Briloff.

Morningstar Fund Analysts, 12/19/2013

John J. "Jack" Granahan, a longtime manager of a portfolio sleeve of Vanguard Explorer VEXPX, is stepping back from investment duties at the end of 2013. Granahan, 77, will stay on as chairman of Granahan Investment Management, a firm he co-founded in 1985. Earlier in his career, Granahan worked at Wellington Management Company where he managed the Explorer fund from 1970 to 1979. While at Wellington, he also managed Vanguard Morgan Growth VMRGX when it first launched in 1968.

Vanguard initially hired Granahan's firm to subadvise Vanguard Explorer II in 1985, and retained the firm to manage a sleeve of the Explorer fund when it merged with Explorer II in 1990. The firm now manages roughly one fourth of the Explorer fund's $12 billion in assets alongside six other subadvisors.

A seasoned investment team remains in place at Granahan Investment Management. The firm's chief investment officer, Gary Hatton, has served as a comanager of the Explorer fund since 1998. The firm's chief executive officer, Jane White, has served as a comanager since 2000. Hatton and White--who co-founded the firm alongside Jack Granahan--have the support of a team of five portfolio managers and analysts.

Legg Mason's Bill Miller Drafts Plans for Go-Anywhere Income Fund
Legg Mason and Bill Miller have filed to launch Miller Income Opportunity Trust. The fund will be comanaged by Miller--who posted a streak of chart-topping results at Legg Mason Capital Management Value Trust LMVTX followed by disastrous losses in the late 2000s--and his son Bill Miller IV. The fund has the freedom to invest globally and across asset classes in order to deliver a high level of current income. Its investment universe includes global stocks and bonds, master limited partnerships, private mortgage-related securities, closed-end investment companies, and derivatives.

The fund will follow a strategy that Miller has plied in private vehicles since early 2009. However, it does not yet carry a public track record.

The new fund launch follows a recent resurgence in Miller's performance. His other charge, Legg Mason Opportunity Trust LMOPX, posted top-decile returns in 2012 and 2013, after lagging nearly all mid-value peers in 2008, 2010 and 2011. Miller has a history of buying private placements at Opportunity Trust, though he has de-emphasized smaller, less-liquid fare in recent years--partly to reduce the fund's overall risk profile. Miller Income Opportunity Trust will provide him with a wider menu of investment options.

Ken Feinberg to Retire From Davis Funds
Ken Feinberg, longtime comanager of Davis New York Venture NYVTX,  Selected American SLADX, and Clipper CFIMX, is retiring from Davis Advisors at the end of this year. Danton Goei, who has been with the firm for about 15 years and has managed a big sleeve of Davis Opportunity RPEAX for 12 years, will take Feinberg's place on New York Venture, Selected American, and Clipper. Chris Davis, Feinberg's partner and firm CEO and CIO, remains on those large-cap funds and will take over Feinberg's other assignment, Davis Financial RPFGX, which he comanaged from the fund's inception to 2007 before handing it off to Feinberg, who had been a listed fund manager on Davis Financial since 1997.

The decision to retire was mutual, and Feinberg has no plans to work anywhere else right now, Davis said. Indeed, Feinberg will serve as an advisor and consultant to the firm for at least a couple of years. Feinberg could not be reached for comment this week. His withdrawal is a surprise, but Goei's promotion is not. Davis has telegraphed Goei's advancement within the firm for several years, mentioning his contributions in annual reports and giving more authority in analyst-run funds like Davis Opportunity, where he will continue to play a role until other analysts are assigned to the fund. Still, this is a material change that will affect most Davis-advised funds' ratings.

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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