The Eight Biggest Manager Changes of 2009
Which funds got upgrades and which got downgrades?
Which funds got upgrades and which got downgrades?
Manager changes present one of the tougher challenges for investors. When you bought a fund, it may have had an experienced manager, a strategy you liked, and a strong record. But when there's a manager change, it's not easy to figure out how good the new manager is, what his or her record is, and what strategy he or she will follow. And sometimes the change was made because of poor performance, so you have to figure out if the new manager can turn things around.
It's made more difficult because fund companies tend not to draw much attention to the changes and they often spin the changes a bit so that they sound like upgrades. If the fund had a strong record, then they'll say nothing will change. If it had a weak record, then they'll say the change fixes everything.
At FundInvestor, I try to help out by sending quick e-mails with my first takes on the changes. I also publish a brief breakdown of the latest changes in FundInvestor each month. So, to get you caught up on any key changes that you might have missed, here are some of the biggest changes announced so far this year. The manager change date is listed to the right of each fund name.
T. Rowe Price New Horizons (PRNHX)Impact--Negative; March 1, 2010
T. Rowe Price New Horizons manager Jack Laporte will retire in March and be replaced by Henry Ellenbogen of T. Rowe Price Media & Telecommunications (PRMTX). Our Take: We're fans of Ellenbogen based on his skill as an analyst, but he's making a big move up to running a big diversified fund. So, the fund is losing a lot of experience. On the plus side, there's time for a smooth transition as Ellenbogen gets up to speed on the holdings in the portfolio. T. Rowe generally handles transitions well.
American Century Ultra (TWCUX)Impact--Negative; April 22, 2009
Comanager and growth chief investment officer Steven Lurito left American Century. Current comanagers Keith Lee and Michael Li will run the fund. Our Take: It's a blow to see a key leader leave the firm. In mid-2007, Lurito was brought in to shore up flagging growth funds like this one, but now he's gone. Lurito is the fourth comanager to leave this fund in the past four years, including Tom Telford, who left just last December. We don't expect drastic changes to the fund's strategy.
Fidelity Growth & Income (FGRIX)Impact--Positive; Jan. 20, 2009
Fidelity replaced Tim Cohen with Jim Catudal at the struggling Fidelity Growth & Income. Catudal managed Fidelity Stock Selector (FDSSX) since 2001, delivering solid results. Our Take: The once-dependable Fidelity Growth & Income was a disaster under Tim Cohen, so the change is understandable, but why make it a growth fund? It used to be this fund would do much better in down markets and come close to the market's returns in up markets. Since Cohen took over in 2005, though, it's been a no-weather fund. Catudal did a fine job at the more growth-oriented Stock Selector, though he's off to a rough start so far here. He appears to have moved the fund to the growth side of the Morningstar Style Box, so if you were looking for a conservative value fund, move on.
Janus Worldwide Impact--Positive; April 1, 2009
Jason Yee was replaced by Laurent Saltiel. Saltiel has run Janus Adviser International Equity since November 2006. He has beaten his world-stock peers since taking the helm there. Our Take: This is the least surprising manager change of the year, as Yee has been struggling for many years. Saltiel's record is fairly short, but at least what there is of it is encouraging. For what it's worth, the fund has a solid year-to-date return.
Longleaf Partners International (LLINX)Impact--Negative; Sept. 1, 2009
Comanager Andrew McDermott left the firm, but Mason Hawkins and Staley Cates will continue as comanagers. The main analysts on International, Scott Cobb and Ken Siazon, will take a larger role at the fund, though they have not been named comanagers at this time. Cobb, based in London, has been promoted to head of European research, and Siazon, based in Singapore and Tokyo, to head of Asian research. Cobb and Siazon each joined Southeastern Asset Management in 2006 after a number of years at other firms. Our Take: The fund is still in good hands, but it's always a negative when you lose a skilled investor.
FPA Capital Impact--Negative; Jan. 1, 2010
Bob Rodriguez will take 2010 off, leaving Dennis Bryan and Rikard Ekstrand in charge. The two were named comanagers in 2007, but they have been with the firm for more than a decade. Our Take: We don't expect a strategy shift, but it still takes the fund down a notch to lose the man whose fingerprints are all over the strategy and track record.
Third Avenue Value (TAVFX)Impact--Positive; July 1, 2009
Ian Lapey has been named comanager of Third Avenue Value. Our Take: It's not a surprise, as he was named Martin Whitman's successor in 2006 and has been with Third Avenue since 2001. We've been talking with Lapey for a few years and feel comfortable with his growing role at the fund.
FBR Focus (FBRVX)Impact--Negative; Aug. 22, 2009
Charles Akre resigned and has launched his own fund (Akre Focus Fund (AKREX)). FBR has hired three of his analysts to run FBR Focus in his absence. David Rainey, Brian Macauley, and Ira Rothberg have worked on the fund the past five years. Rainey had worked with Akre for the past 11 years on the fund. Macauley joined the duo in 2003, and Rothberg was added in 2004. Our Take: Akre's departure is a blow. His replacements will stick to the strategy, but we can't be sure if they'll do as well with final say on trades, as this is their first time.
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