Fund Times: Morningstar Plans Five New Fund Categories
Plus, Oakmark managers step up while Columbia managers don't.
Morningstar will launch five new mutual fund categories on March 3, 2006. The categories are inflation-protected bond, long-short fund, target date 2000-2014, target date 2015-2029, and target date 2030+. Each category represents a distinct investment strategy that has grown in popularity to the point where the funds that employ it deserve their own category.
Inflation-protected bond will include funds that invest most of their assets in bonds whose coupon is adjusted in line with the rate of inflation. TIPS funds behave differently from most government-bond funds because of this inflation component. Thus, we think it makes sense to break them out into their own category.
Long-short funds are funds that invest a significant amount in long and short positions. This includes market-neutral funds as well as funds that actively shift their long and short weightings.
Finally, the three target-retirement categories will include funds that are designed with a specific retirement date in mind. These funds differ from others in that they make incremental shifts in their asset allocation over time as the retirement date nears and after it has passed.
Federated CEO Steps Down
Federated Investors (FII) announced that Keith M. Schappert has resigned as CEO of Federated's investment advisory subsidiaries and will be replaced by John B. Fisher. Fisher had been president of Federated Investment Counseling.
Oakmark Managers Step Up
Oakmark has revealed that all of its managers have more than $1 million invested in the funds they manage. In fact, manager Bill Nygren has more than $1 million in Oakmark (OAKMX) and in Oakmark Select (OAKLX). Manager David Herro has more than $1 million in Oakmark International Small Cap (OAKEX) and in Oakmark International (OAKIX).
Twenty-One Managers Can't Be Wrong
According to a new filing with the SEC, not one of Columbia Asset Allocation's (LAAAX) 21 listed managers has any money invested in the fund. We think the managers are making a smart call, as the offering is a Morningstar Fund Analyst Pan.
Anthony Taken Off Masters' Select Smaller Companies Fund
Litman/Gregory Fund Advisors removed David Anthony of Ranger Investment Management as a subadvisor to Masters' Select Smaller Companies (MSSFX). Litman/Gregory gave Anthony's portion of the fund to Bill D'Alonzo of Friess Associates and Dick Weiss of Wells Capital Management because, like Anthony, they have a growth bias.
"We are disappointed that Anthony and Ranger did not work out as a subadvisor to the fund. At the present time we will not be replacing Anthony," the firm said in a press release. "However, we will be actively looking for a growth manager with a small company focus."
It's an unusual situation for Masters' funds. In previous changes, a new manager was ready to go when the previous manager was dropped. It could be that the firm felt the need to move quickly or that it simply couldn't find a good small-cap growth manager with the capacity to manage more money so many years into a small-cap rally.
Dodge & Cox Updates Its Take on Asset Growth
Dodge & Cox has published an update on how it is handling its tremendous asset growth. The girth of the firm's stock portfolios has forced it to own bigger stakes in more companies, which slows it down as it tries build and exit positions, but speed was never an essential component of this firm's value-oriented, low-turnover strategy.
"On June 30, 2000, Dodge & Cox 'owned' on behalf of our clients between 5% and 10% of the outstanding shares of 20 companies in the portfolio, and over 10% of the outstanding shares of one company in the portfolio," the firm said. "At that time, the typical Dodge & Cox portfolio held 83 stocks. On June 30, 2005, Dodge & Cox owned between 5% and 10% of the outstanding shares of 33 companies in the portfolio, and between 10% and 13.4% of the outstanding shares of 20 companies in the portfolio. At this time, the typical portfolio held 93 stocks."
Russel Kinnel has a position in the following securities mentioned above: OAKLX. Find out about Morningstar’s editorial policies.