Fund Times: Supreme Court to Weigh In on Mutual Fund Fees
Plus, more fund mergers announced.
The Supreme Court announced this week that it will review the fund fee case brought against Harris Associates, advisor to the Oakmark funds. The Supreme Court will hear oral arguments for Jones v. Harris this fall. As we've reported before in Fund Times, the Supreme Court will weigh in on whether Harris' fees were excessive. For more information, including the legal question the Supreme Court will tackle, check out Oyez. For a more detailed analysis of the case, including what an overruling might mean for mutual fund shareholder fees, see this Fund Spy.
Transamerica Fires Advisors
Transamerica has fired TCW and AllianceBernstein from Transamerica Partners Large Value Fund (DVEIX) because of performance and volatility. Stepping in for AllianceBernstein is Philadelphia-based quant shop Aronson+Johnson+Ortiz (AJO). AJO comanages another Transamerica fund, Transamerica Partners Large Core (DVGIX), with BlackRock. AJO also manages Quaker Small-Cap Value (QUSVX), a small-blend fund, and Absolute Strategies (ASFIX), a fund of funds within the long-short category.
Three-Time Morningstar Manager of the Year Award Winner to Take Sabbatical
FPA's Bob Rodriguez announced that he will step back from day-to-day management of his funds, FPA Capital (FPPTX) and FPA New Income (FPNIX), in 2010. Please see my colleague Russel Kinnel's take on what the departure means for shareholders.
Vanguard Adopts New Policy for Controversial Holdings
Vanguard's fund board recently directed the firm to report back on companies in which it invests that might be involved with human rights' abuses. Vanguard, along with other investment firms, has been subject to criticism from special-interest groups that object to the funds' investments in firms such as PetroChina (PTR).
Under the new policy, the fund board will receive regular reports on companies in which they invest "whose direct involvement in crimes against humanity or patterns of egregious abuses of human rights would warrant engagement or potential divestment."
It is unclear what impact this new procedure will ultimately have on a formal shareholder proposal from Investors Against Genocide, which would require a similar review process for holdings at 30 Vanguard funds.
RiverSource and Seligman Fund Merger Update
Just weeks after RiverSource's purchase of Seligman, RiverSource says it plans to merge 47 Seligman and RiverSource funds. The affected funds include Riversource Global Technology (AXIAX), which would be merged into Seligman Global Technology (SHGTX). Meanwhile, Seligman Common Stock (SCSFX) would merge into RiverSource Disciplined Equity (AQEAX). In addition, the majority of Seligman's single-state municipal-bond fund lineup would be merged into Seligman National Municipal (SNXEX).
Of the 47 funds involved, 30 Seligman funds will charge shareholders 0.16% of assets to change transfer agents. We're disappointed that RiverSource elected to pass this cost on to fundholders, though the mergers should generate economies of scale and using one transfer agent for all funds should result in some annual savings over the long term. These savings will lower the expense ratios on most of the merged Seligman funds 12 months after they are merged, which is expected (pending shareholder approval) in May.
Fidelity Launches Cheaper Share Class for Retirement Plans
Fidelity is launching a new low-cost share class aimed at retirement plans. The new K shares will be available only through retirement plans. For example, while Fidelity Freedom 2030 (FFFEX) charges 0.76%, the K shares will be almost 30% cheaper and charge only 0.54%.
Mutual fund analyst Harry Milling contributed to this report.
Editor's Note: This column has been corrected to remove mention of Hotchkis and Wiley in regard to Transamerica Partners Large Value Fund's new advisor. Click here to see the correction.
Ryan Leggio does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.