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Fund Times: Key Management Team Departs Nicholas-Applegate

Plus, news on a new crude-oil ETF, management additions at MFS, and more.

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Stacey Nutt and five other members of Nicholas-Applegate's systematic equity team have left the firm to form ClariVest Asset Management LLC. Nicholas-Applegate CIO and managing director Horacio Valeiras, who has stepped in to lead the systematic team for now, terminated Nutt on March 9 when it became clear to him that Nutt had made plans to launch his own firm. Nutt and Nicholas-Applegate are in arbitration proceedings. The split was reportedly spurred by a failure to agree on a new compensation plan.

The loss is significant for Nicholas-Applegate. Collectively, Nutt, David Pavan, Todd Wolter, David Vaughn, Frank Feng, and Aerus Tran composed about half of the systematic team. That said, Valeiras is doing all the right things at this point. He's seeking out new team members and concentrating efforts on existing products (rather than expansion). In a heavily quantitative process like the one the systematic team uses at funds such as  Nicholas-Applegate Growth Equity (NAPGX), the models will remain in place and ought to work fine over the short term and midterm. The concern is more long term: If the firm can't find strong replacements, the quant models could degrade over time.

Lawrence Jones does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.

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