Low-Profile Funds with High Potential

With so many mutual funds out there, it's tough to keep track of all the notable changes that take place. That's why I enjoy reading our weekly Fund Times column, published every Friday. It's a useful recap of some of the more important fund news that crosses the wire each week.

In particular, I like to pay attention to manager or strategy changes because they often help you narrow your focus. For instance, I like nothing better than to see an underperforming fund suddenly get a very talented manager, as was the case in 2000, when we turned positive on  FPA Paramount  after Eric Ende and Steve Geist took charge.

As such, I've isolated some funds that probably aren't on many investors' watch lists, but that deserve some attention due to recent or upcoming changes. They've got talented managers stepping into new situations. I'm also throwing in a fund with a strategy change in the works that may not be what fundholders are bargaining for.

 T. Rowe Price Global Stock  (PRGSX)
Many eyebrows were likely raised after T. Rowe Price announced that Rob Gensler, manager of  T. Rowe Price Media & Telecom (PRMTX) and  T. Rowe Price Global Technology (PRGTX), would run this fund. While the move is somewhat curious given that T. Rowe has been rebuilding its international team, the fund is nevertheless getting a very talented manager with a strong record to lead it. Gensler's media fund already keeps more than 40% of its assets overseas, while his tech charge keeps 15% of its assets outside the U.S. He's also well respected among the firm's other managers and analysts. Current investors should note that the portfolio is likely to shift towards the growth column, reflecting Gensler's preference for market-leading firms that are growing cash flow at a brisk clip, even if it means paying up a tad. But we don't think the transition should be too jarring, and the long-term picture under Gensler's watch looks considerably brighter than before.

Delaware's Growth Funds
Delaware recently announced that it had successfully hired away members of Transamerica's growth team, who we think highly of. The hires include Jeff Van Harte and Dan Prislin of Transamerica Premier Core Equity , and Chris Bonavico and Ken Broad, who oversaw  Transamerica Premier Growth Opportunities . The team built strong records at their previous charges, and we like the truly active nature of their process. In particular, they tend to concentrate their picks and hold them for the long haul. Thus, while volatility is a byproduct of their approach, we think investors will do fine over time. And while Delaware hasn't made clear exactly where these folks will land, there's a good chance it will be at funds such as Delaware Diversified Growth (DGDAX). (We'll have more details--as they become available--in upcoming editions of Fund Times.)

And now for a change that left us scratching our heads….

 Henlopen Fund 
This fund is soon to be acquired by the Hennessy Funds, and its shareholders should expect significant strategy changes. The fund will be run in the same strategy as  Hennessy Cornerstone Growth (HFCGX), which is a mostly qualitative, concentrated offering that relies on historical data to form its portfolio. Meanwhile, Henlopen utilizes a fundamental, forward-looking strategy to select stocks with strong growth catalysts. Granted, both funds have strong long-term records versus their category peers, but they are very different animals, which makes the board's approval of this merger curious. In fact, in the proxy vote relating to the merger, the board doesn't list "similarity of investment styles" as a reason for the merger. We think it should have, given the magnitude and significance of the strategy shift.