Fund Times: Vanguard Tweaks One Favorite, Opens Two More
Plus, changes at two other Morningstar Analyst Picks, and more.
Plus, changes at two other Morningstar Analyst Picks, and more.
Vanguard announced changes to the investment policy of its $26 billion in assets foreign large-blend index offering and Morningstar Fund Analyst Pick, Vanguard Total International Stock Index (VGTSX). Until now, the fund had been structured as a fund of funds, investing in a combination of three other international index funds: Vanguard European Stock Index (VEURX), Vanguard Pacific Stock Index (VPACX), and Vanguard Emerging Markets Stock Index (VEIEX). Now, the fund will be allowed to own European, Pacific, and emerging-markets stocks directly. The firm is initially transitioning roughly 50% of the fund's mutual fund shares to direct equities.
This modification won't alter the fund's objective of tracking a customized benchmark based on the MSCI Europe Index, MSCI Pacific Index, and MSCI Emerging Markets Index (the portfolio was divided between these three areas by 55%, 24%, and 21%, respectively, as of March 31, 2008), and the fund's 0.27% price tag won't change. Vanguard anticipates that the fund's added flexibility will improve its ability to track the markets, as the fund will now be able to invest cash flows as they're received rather than waiting until the end of the day. Other benefits include the potential for increased tax efficiency, according to the firm.
On the active-management front, the firm has reopened small-growth offering Vanguard Explorer (VEXPX) and Vanguard Health Care (VGHCX), which are also Analyst Picks in their respective categories. When the $10 billion Explorer first closed in February 2006, its assets weighed in at $12 billion. Health Care has been closed since March 2005, when its assets approached $23 billion, and the fund is roughly $600 million larger today. Both funds, however, have seen steady outflows over the past two years or so. New purchases in Explorer require a minimum investment of $3,000 for all account types, while Health Care requires an initial commitment of at least $25,000.
For more on Health Care and Explorer, join the conversation with Vanguard Fund Family Report editor Dan Culloton in Morningstar's Discuss area.
Matthews Reopens Asian Funds
Matthews International Capital Management, an asset-management firm specializing in Asian equities, will reopen a pair of funds on Sept. 2, 2008: Matthews Pacific Tiger (MAPTX) and Matthews Asian Growth & Income (MACSX). An Analyst Pick in the Pacific/Asia ex-Japan Stock category, the all-cap Pacific Tiger originally closed to investors in June 2006, and Asian Growth & Income closed back in November 2003. Although rapid inflows were the cause behind the fund closings, Matthews hopes to put new money to work in investment opportunities it is spotting among firms with strong growth prospects and attractive valuations. Pacific Tiger and Asian Growth & Income have roughly $2.7 billion and $1.9 billion in assets, respectively.
Mid-Growth Favorite Gets New Share Class
The Berwyn, Pa.-based Turner Funds is now offering an institutional share class for the $1.3 billion Turner Midcap Growth , another Analyst Pick in the mid-cap growth category. The no-load fund was first launched in October 1996. Its investor share class requires an initial investment of $2,500 and currently costs shareholders 1.18% of assets per year, which is slightly above median for a mid-cap fund.
The new institutional share class, listed under the ticker , requires a minimum investment of $250,000 if purchased directly from the fund company or the lower hurdle of $100,000 if bought through a mutual fund supermarket. Turner has agreed to cap the fund's annual levy at 0.93% of assets through Jan. 31, 2009, which does fall under the median for other institutional shares in the mid-cap arena.
Columbia Acorn Lowers Minimums
Columbia Wanger Asset Management, advisor to the Columbia Acorn funds, will lower the minimum investments on its trio of domestic-stock offerings: Columbia Acorn (LACAX), Columbia Acorn Select , and Columbia Acorn USA . Investors can now gain access to the funds for a minimum of $2,500 ($1,000 for IRAs), in keeping with the typical entry points for other Columbia offerings.
Investment hurdles were first raised to $100,000 for Acorn Select and $75,000 for Acorn and Acorn USA in 2005 in an effort to curb inflows. Lately, the managers have whittled down their cash positions to meet shareholder redemptions, and dropping the minimums could help alleviate that pressure and also allow the managers to put money to work in stocks that look attractively valued to them.
Fidelity Canada Gets Temporary Boss
Fidelity announced that Max Lemieux, manager of the hot but narrowly focused Fidelity Canada (FICDX), is taking a six-month leave of absence starting Sept. 1, 2008. Although the firm expects Lemieux to return in March 2009, it has named Douglas Lober as the fund's interim manager during Lemieux's absence. After a brief stint as a research analyst and sector-fund manager from 1986 to 1989, Lober returned to Fidelity's research ranks in 1997, when he ran Fidelity Select Paper & Forest Products . He joined the Canadian equities team in 1998, and he's worked closely with Lemieux on this fund since. Although he hasn't managed a mutual fund since joining the Canadian team, he has run diversified portfolios since 1999.
Allianz Ousts Value Veteran
Allianz announced a management change at Allianz OCC Value . The advisor is ousting Colin Glinsman of Oppenheimer Capital in favor of the Dallas-based dividend-focused team, NFJ Investment Group. Eventually, Allianz hopes to merge the fund into Allianz NFJ Large Cap Value (PNBAX). Ill-timed bets on financials stocks have slammed the fund lately. It's down 27% for the year to date, after falling nearly 6% in 2007. Although Glinsman's recent missteps have stung, he has racked up strong long-term returns at Oppenheimer Quest Balanced (QVGIX) during his more than 15 years at the fund. For senior mutual fund analyst Marta Norton's more-detailed thoughts on this decision, click here.
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