Fund Times: Hancock Partners with GMO
Plus, Fidelity manager changes, Loomis, and more.
Plus, Fidelity manager changes, Loomis, and more.
John Hancock, whose funds have been a mediocre bunch, recently announced the introduction of several new funds: U.S. Core, U.S. Quality Equity, Active Value, Intrinsic Value, Growth, International Core, International Growth, Global, Value Opportunities, and Growth Opportunities. In an interesting twist, the funds will be outsourced to reputed institutional investors Grantham, Mayo, Van Otterloo & Co. The total expense ratios haven't been finalized yet, but the funds' A shares will continue to sport above-average 12b-1 fees of 0.30%.
Outsourcing the management duties for these new offerings is probably a good move for a shop that hasn't done well managing funds in-house but that has had unusually good success in choosing subadvisors. John Hancock Classic Value (PZFVX) and John Hancock U.S. Global Leaders Growth (USGLX), for example, have both been solid options in their respective categories. However, we'll be looking for more detailed expense information. Currently, the management fees range from 0.78% to 0.95%, substantially higher than what Grantham, Mayo, Van Otterloo plans to charge on some clone funds it plans to launch.
Another Small-Cap Fund Closes
Former Analyst Pick Century Small Cap Select (CSMVX) will close to new investors on July 18, 2005.
This small-growth fund has had the wind at its back over the past few years, as small-cap stocks have outpaced their larger-cap peers. But the fund has also executed its strategy well. For the five-year period through June 28, 2005, Century Small Cap Select has risen an annualized 18.4%, a showing that places it among the small-growth category's elite. This performance has not gone unnoticed: Assets in the fund have grown steadily since its February 2000 inception, and total assets managed under the same strategy recently topped $580 million. We think the advisor's decision to limit new flows into the fund is a shareholder-friendly move.
Loomis Lowers Fees
In an SEC filing dated June 28, 2005, Loomis Sayles added fee breakpoints to Loomis Sayles Bond (LSBRX) and Loomis Sayles Global Bond (LSGLX).
In the previous prospectus, the firm's management fee was a flat 0.60%. Now, shareholders will pay 0.60% on assets up to $3 billion, and 0.50% beyond the $3 billion mark for Loomis Sayles Bond, and 0.60% on assets up to $1 billion, and 0.50% beyond the $1 billion for Loomis Sayles Global Bond. As of May 31, 2005, Loomis Sayles Bond had $3.5 billion in assets and Loomis Sayles Global Bond had $1.2 billion in assets. Still, the fees are no bargain.
Etc.
Wilson Wong is joining current comanagers Ben Paton and Tokuya Sano at Fidelity International Small Cap (FISMX). Wong has also taken over the manager role at Fidelity Advisor Korea from Michael Gordon, who had managed the fund only since December 2004. Wong joined Fidelity in 2000 as an equity analyst, and has managed several overseas portfolios.
Jennison Health Sciences (PHLAX) will close to new investors on July 29, 2005. Huge inflows from performance-chasing investors have started to affect the manager's high-turnover, small/mid-cap flavored style.
In an SEC filing dated June 27, 2005, New York-based Domini Social Investments announced a new fund, Domini European Social Equity. The fund will invest primarily in European companies that "contribute positively to the creation of a wealthy and healthy society." Further, the fund will avoid securities in companies that derive significant revenue from tobacco, alcohol, firearms, and gambling, and those that have an ownership stake in nuclear power plants. Running the fund will be Steven Lydenberg, Jeff MacDonagh, and Kimberly Gladman, all of whom also help manage the other Domini funds. Finally, there's a temporary expense cap in place, so fees won't exceed 1.60%.
Federated Investors (FII) will acquire Vintage Mutual Funds and its $164 million in assets, which is only a drop in the bucket next to Federated's existing $179 billion in assets under management. Vintage currently manages nine distinct funds advised by Investors Management Group. The Vintage family of funds is a fairly nondescript fund shop. They have suffered through strategy changes and management departures to the point where their performance has been miserable. Reflective of that, none of the funds carry Morningstar Ratings of 4 or 5 stars. Furthermore, the fund's expense ratios are well above no-load category averages.
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