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Manager Changes Boost These Funds' Ratings

Tue, 8 Apr 2014

Key management moves have ultimately proved positive for these large-growth funds.

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Video Transcript

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Dan Culloton: We're going to talk about Laudus U.S. Large Cap Growth and BlackRock Capital Appreciation today. The story begins with Laudus U.S. Large Cap Growth. In 2012, its manager, Lawrence Kemp, left that fund's subadvisor, UBS, for BlackRock. That set off a bunch of manager changes at the Laudus fund and led its [Morningstar Analyst Rating for Funds] to be dropped to Neutral because of the uncertainty there.

Meanwhile, at BlackRock, Lawrence Kemp took over BlackRock Capital Appreciation, which had been a fairly mediocre fund up until that point, and began rebuilding his team. As he rebuilt his team, he tapped a lot of people that he worked with at UBS on the Laudus Large Cap Growth fund. Ultimately, he ended up rebuilding a team of seven people, four of which were very familiar with the process that Kemp used at the Laudus U.S. Large Cap Growth fund. In fact, they could lay claim to that fund's good long-term track record.

Now, almost a year later, Kemp and BlackRock has been rehired to run the Laudus U.S. Large Cap Growth fund as a subadvisor, and his team is in place with experienced people who know his process and who can lay claim to that fund's long-term track record. So we've increased the ratings of the Laudus fund and BlackRock fund from Neutral to Bronze. Ultimately, these funds are best used perhaps as complements to a large-cap position in a portfolio. But I think for a growth-oriented investor, someone who's maybe a little more aggressive, they could serve as a core large-cap holding, as well.

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