Fund Times: Vanguard Launches Three New ETFs
Plus, two more small-cap funds close and Phoenix Funds is in hot water.
Plus, two more small-cap funds close and Phoenix Funds is in hot water.
Vanguard announced that its three new international exchange-traded funds began trading on the American Stock Exchange on March 10. The firm’s ETF lineup now consists of 23 offerings. In addition to these new funds, Vanguard also offers nine ETFs tracking broad domestic stock markets and 11 tracking specific domestic-stock sectors.
Vanguard European VIPERs, which is trading under the ticker symbol VGK, tracks the MSCI Europe Index, which is made up of stocks from 16 European countries. Vanguard Pacific VIPERs (VPL) tracks the MSCI Pacific Index, which is made up of stocks from companies in Japan, Hong Kong, Australia, New Zealand, and Singapore. Vanguard Emerging Markets VIPERs (VWO) tracks the Select Emerging Markets Index, which consists of stocks that can be bought free of restrictions in 18 emerging markets in Europe, Asia, Africa, and Latin America.
The European and Pacific VIPERs’ expense ratios are 0.18%, and the Emerging Markets VIPERs charges 0.30%.
Turner Closes Small Cap Equity
According to an filing with the Securities and Exchange Commission, Turner Small Cap Equity will close to new investors on May 1.
Although the Small Cap Equity fund has only $46 million in assets, Turner stated that they have reached the level that it can effectively invest in micro-cap, small-cap equity, and small-cap growth styles. Other Turner funds run in this style include $445 million Turner Micro Cap Growth and $254 million Turner Small Cap Growth , which closed to new investors in March 2000 and July 2004, respectively.
SEC Issues 'Deficient Letter' to Phoenix
The Phoenix Companies announced in its annual report to stockholders that it has received a "deficient letter" from the SEC, which focuses on weakness in the firm’s procedures for monitoring mutual fund trading.
According to the report, the Boston District Office of the SEC recently completed a compliance examination of some of Phoenix's affiliates that provide advisory services. Following the examination, the staff of the Boston District Office the deficient letter, which, according to the report, primarily focused on perceived weaknesses in procedures for monitoring trading to prevent market-timing activity.
The staff then requested that the company conduct an analysis to determine whether investors in the funds that may have been affected by undetected market-timing activity had suffered harm, and to advise the staff whether Phoenix believes reimbursement is necessary or appropriate under the circumstances.
Phoenix said a third party, whom it did not identify, will assist in preparing the analysis.
Phoenix also revealed in the annual report that the National Association of Securities Dealers recently notified it that a broker-dealer subsidiary apparently violated a trade-reporting requirement. Phoenix said it is developing its response, and continues to actively cooperate with regulators.
Finally, Phoenix said it recently received a subpoena from the Connecticut Attorney General's office requesting information regarding certain distribution practices since 1998. The company said it is cooperating fully.
Scudder Names New Leaders
Deutsche Bank named Axel Benkner sole head of retail business for Deutsche Asset Management, the firm that runs U.S.-based Scudder Investments and Europe-based DWS Investments. Benkner used to share the responsibility as head of retail products with William Schiebler, who has been appointed vice chairman of Deutsche Asset Management, the company said.
In addition, Axel Schwarzer has been appointed head of Scudder Investments; he will report to Benkner, Deutsche Bank said. Schwarzer is currently a managing director at DWS Investments, responsible for products, marketing, and distribution.
In a press release, Deutsche said Benkner and Schwarzer have been instrumental to DWS Investments’ “success story,” noting that DWS is currently the largest mutual fund company in Europe with 146 billion euros in assets under management. Scudder, meanwhile, has suffered billions in outflows over the past several years.
According to a March 7 report in Pension & Investments magazine, Thomas Eggers, whom Benkner appears to be replacing, is rumored by unnamed sources to be leaving Scudder at the end of March when his three-year contract expires.
When asked specifically what responsibilities Schiebler will take on in his new role as vice chairman, and what role Eggers will have at the company going forward, a Deutsche Bank spokesperson declined to comment.
Prudential Makes Some Changes to Strategic Partners Equity
Prudential is set to go from three subadvisors to one at Strategic Partners Equity (PBQAX). Prudential is firing Salomon Brothers Asset Management and GE Asset Management, who had managed a combined 50% of the fund's assets and turning the money over to its own subsidiary, Jennison Associates LLC. Previously, Jennison had run the other 50% of the fund. To reflect this change, the fund will be renamed Jennison Blend Fund.
Investors should not be rattled by this departure, says Morningstar fund analyst Laura Pavlenko Lutton. Indeed, these two subadvisors’ index-hugging portion of the portfolio smoothed out returns to the point where it was difficult for the fund to distinguish itself from the crowded large-blend pack, Lutton said.
Jennison is a solid research shop and its managers, Dave Kiefer and Blair Boyer, have proven stock-picking abilities. Spiros "Sig" Segalas, manager of the successful Harbor Capital Appreciation (HACAX) , is also a named comanager on the fund. At his other fund, Segalas runs a small portfolio with around 60 holdings. He typically sticks with his convictions, which leads to below-average turnover.
That said, Lutton offers a word of caution for existing shareholders in the fund. "Some customers who bought this fund for its grounding in the S&P 500 Index may not like this new structure, but we think the fund has better long-term prospects than it did under the multimanager approach," she said.
Manager Changes at MFS
John Laupheimer, longtime manager of MFS Massachusetts Investors Trust (MITTX), is retiring from MFS at the end of May. Beginning May 1, former analyst Nicole Zatlyn will run the fund along with Kevin Beatty, manager since July 2004.
Effective April 1, 2005, Simon Todd will be added as a manager of MFS Global Equity (MWEFX). He joins David Mannheim, who has run the fund since 1988.
Telis Bertsekas is now running MFS Technology (MTCAX). He's been at MFS since 2004, and before that he was at American Express and Fidelity.
Ed Baldini, a non-stock-picking assistant portfolio manager at MFS Value (MEIAX) and MFS Total Return (MSFRX), is leaving MFS. He'll be replaced by Katrina Mead, who has held a similar role on MFS’ large-blend funds.
Etc.
$484 million AIM International Small Company (IEGAX) is closing to new investors as of the close of business on March 14, according to an SEC filing.
Nicholas-Applegate plans to merge $13 million Nicholas-Applegate U.S. Systematic Mid Cap Growth into $6 million Nicholas-Applegate U.S. Systematic SMID Growth , pending shareholder approval.
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