Fund Times: Pioneer Loses Star High-Yield Manager

Longtime, highly respected manager Margie Patel resigned on March 30 from  Pioneer High Yield (TAHYX). Pioneer replaced Patel with a management team that has had success elsewhere. New manager Andrew Feltus has delivered impressive performance at  Pioneer Global High Yield . He is joined by Tracy Wright, who has worked as an analyst of high-yield and distressed companies.

From its inception Patel ran High Yield in a distinctive, and contrarian, value-oriented style. She sought industries with improving prospects and attempted to avoid those corporate sectors that were overly troubled. This analysis led her to avoid in the early 2000s the telecommunications sector, which was a sizable part of the high-yield market before suffering disastrous performance.

Patel's early use of alternatives to high-yield corporate bonds, such as convertible securities and equities, helped the fund move very differently from category peers, often to investors benefit. For instance, from the fund's inception in 1998 to the end of 2002, returns here were cumulatively more than 50%, while the category suffered a loss of 3.5% over the period. The avoidance of an imploding telecom sector and the deft use of converts drove much of that performance. To be sure, there were times when the fund underperformed, but Patel keenly stayed one step ahead of much of the competition. More recently, for example, she showed considerable talent in running an equity fund, Pioneer Equity Opportunity , giving us confidence in the increasing role stocks played in the high-yield fund. In fact, the mid-value Equity Opportunity was one of the top performers in its category over the past 12 months. Timothy Horan will now take over there.

We're disappointed about Patel's loss at one of Pioneer's larger funds, but we're curious to see where she ends up. Investors should take a wait-and-see approach.

First Data Buyout Boosts Some Funds, Others Miss Out
 First Data Corp.'s  acceptance of a buyout offer earlier this week will substantially boost several funds' returns--especially those that made it a big holding. Only five funds--including  Matrix Advisors Value (MAVFX) and  Fidelity Fifty --held more than 4% of assets in First Data as its stock jumped over 20% on the announcement.

Sure to be disappointed were managers Bill Nygren and Henry Berghoef of  Oakmark Select (OAKLX). The two-man team sold First Data in late 2006 to free assets for a greater investment in First Data spin-off  Western Union (WU). Even so, they remain confident in their new position's prospects: In their most recent shareholder report, they cited several factors they believe will increase demand for Western Union's services, including its dominant market position in international money transfers.

Fidelity Shuffles Managers at Two Niche Funds
 Fidelity Japan (FJPNX) and Fidelity Select Materials (FSDPX) get new managers this week. At the Japan fund, Robert Rowland succeeds Yoko Ishibashi, who managed the fund for nearly seven years but failed to post inspiring results during that time. Rowland comes aboard with 15 years of experience focusing on the Japanese market, including seven years as manager of Japanese equity funds available to overseas investors.

Select Materials' new manager, Duffy Fischer, succeeds Jody J. Simes, its skipper since mid-2003. Fisher is in only his second year at Fidelity, though he gathered seven years of experience and industrials sector knowledge as a sell-side analyst at Goldman Sachs. He also manages Fidelity Select Chemicals (FSCHX), which he took over in December 2006. This change isn't too surprising: In 2006, Fidelity began efforts to place experienced sector analysts as managers in its Select funds lineup. (Read more about Fidelity in our Fidelity Fund Family Report.)

TIAA-CREF to Raise Fees at Several Funds
For the second time in two years, TIAA-CREF has gained approval for an expense ratio increase at several funds (although a handful of other funds will see modest decreases). According to the firm, a handful of money-losing funds need the fee increase, or they will be in danger of liquidation. Hardest hit will be shareholders of  TIAA-CREF International Equity , who currently pay 0.48% annually but will soon pay 0.75%.

We note that many TIAA-CREF funds remain inexpensive within the no-load-fund subsets of their respective categories, but such hikes still diminish their appeal substantially. For example, low fees have helped intermediate-term offering  TIAA-CREF Bond Plus  stay competitive even as its managers took a more cautious approach to credit- and interest-rate risk. TIAA-CREF bond managers may now have to assume more risk to keep their funds competitive.

AllianceBernstein Fund Gets Bigger Management Team
There's been another manager change at  AllianceBernstein Balanced Shares (CABNX). Frank V. Caruso and Aryeh Glatter took over for Stephen Pelensky as managers of the firm's equity allocation. Caruso and Glatter are both experienced members of the firm's relative value team, of which Pelensky was a member. Similarly, the firm's core fixed-income team will now manage this fund's bond allocation instead of John Kelley and the firm's Global Credit Research squad. Kelley's ongoing leadership of this team, however, makes for a smooth change here.

While these changes result from a bit of lineup reshuffling at AllianceBernstein, rather than a drastic change, this is still the third such reworking of managerial duties in as many years. Investors should keep an eye on this fund.