Video Reports

Embed this video

Copy Code

Link to this video

Get LinkEmbedLicenseRecommend (-)Print
Bookmark and Share

By Christine Benz and Russel Kinnel | 11-06-2014 04:00 PM

4 High-Profile Manager Changes

What to make of recent changes at T. Rowe Price, Fidelity, Artisan, and First Eagle.

Christine Benz: Hi, I'm Christine Benz for Several high-profile mutual funds have recently seen manager changes. Joining me to discuss some of them is Russ Kinnel. He is director of manager research for Morningstar.

Russ, thank you so much for being here.

Russ Kinnel: Good to be here.

Benz: Russ, we've recently seen some fairly high-profile manager changes. I'd like to take them one by one, and I know you help steer the analyst rating committee. So, I'd like you to talk about how the manager changes have affected our ratings on these funds.

Kinnel: Sure.

Benz: Let's start with First Eagle Global (SGENX). It's a fund that we have long liked, but Abhay Deshpande recently announced that he's stepping off the fund. Let's talk about that fund. We did downgrade it as a result of this manager change.

Kinnel: That's right. We downgraded the fund from Silver to Bronze, and that tells you we still obviously like the fund. You have two good managers in place, Matt McLennan and Kimball Brooker, who are still there. But Abhay was one of the three managers running the fund, and our concern is that this comes at a time of tremendous asset growth. They've got over $60 billion they're running. In the past, their funds had been closed earlier. They have closed one fund but not the other, which means they could still grow. So, we feel like the two managers left are stretched a little thin. We feel like they'll still do a good job, but we worry that they are stretched a little thin. So, it's really that asset size and losing that manpower at the same time that gives us concern.

Benz: You and the team generally still like the strategy in place here, though?

Kinnel: I really like what First Eagle does. It's a strategy pioneered by Jean-Marie Eveillard at the firm, who has long since retired. But the idea is to really protect investors from the downside while still giving good upside. They are conservative global-equity pickers. They try to find stocks that are relatively cheaply priced and, therefore, have less price risk. They will hold gold, they will own some cash if there aren't enough attractive opportunities. And if you look at the long-term risk/reward profile, it's just great. You get almost all the upside in a rally and significantly less downside in a sell-off. So, we really like the strategy, and given that the markets are up a lot, it's not a bad one to own. But again, it's important to recognize that you have tremendous asset growth there and now one fewer manager.

Read Full Transcript
{0}-{1} of {2} Comments
{0}-{1} of {2} Comment
  • This post has been reported.
  • Comment removed for violation of Terms of Use ({0})
    Please create a username to comment on this article