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By Christine Benz and Russel Kinnel | 06-10-2013 04:30 PM

When Managers Change, So Can Ratings

Recent manager changes at T. Rowe and Janus resulted in Analyst Rating downgrades, says Morningstar's Russ Kinnel.

Christine Benz: Hi. I’m Christine Benz for Morningstar.com.

A fund manager change isn’t always a cause for selling, but it is a reason to do some further research. Joining me to discuss some recent high-profile manager changes is Russ Kinnel. He is director of fund research for Morningstar.

Russ, thank you so much for being here.

Russel Kinnel: Good to be here.

Benz: Russ, let’s talk about some recent high-profile manager changes. We wanted to start with T. Rowe Price New America Growth. This is a fund that we had rated Gold prior to its recent manager change. Now we’ve got it down at Neutral. Let’s talk about what’s gone on there.

Kinnel: Joe Milano left at a fairly young age, so it’s a real surprise. Dan Martino has taken his place, moved up from the Media & Telecom Fund, which is a fund that’s really done very well.

If you look at the past record of managers moving from that fund to diversified funds, one manager, Henry Ellenbogen, has had success; one manager has had not so much success, Rob Gensler at Global Stock. And so, we’re a little cautious. Martino had a good record at Media & Telecom, but we want to see what he does at New America Growth. So, we’ve taken it down to Neutral. There are some positives there, but it remains to be seen what he will do.

Benz: So positives, obviously, being a really nice, deep analyst team that he can draw upon. How do you think the strategy will be different, or the same as Milano’s? Any sense of that?

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