Hot Small-Cap Fund Closing Friday

Aston announced today that it is closing  Aston/TAMRO Small Cap  to new investors at the end of Friday, Oct. 16. The $847 million fund is a solid small-blend offering with a good manager in Philip Tasho. He runs a growth-at-a-reasonable-price strategy that focuses on three themes: consolidation, restructuring, and new products. The fund is up 32% for the year to date as of Oct. 14, and it boasts trailing five-year returns of an annualized 6.1%.

Financials Funds Are Red-Hot
Last year, investors fled the financials sector on fears of the global financial system's collapse. That, of course, didn't happen, and the sector has recovered strongly in 2009. The specialty financials category is up 31.1% this year following a 43.9% loss for the typical financials fund last year. For the year to date,  Goldman Sachs (GS) and  Morgan Stanley (MS) are both up more than 100% and  J.P. Morgan Chase (JPM) is up 51.3% (although some firms like  Citigroup (C) continue to struggle).

 Davis Financial (RPFGX) is beating 86% of its peers this year and is up 106.3% since the start of the market rally on March 9. Manager Ken Feinberg employs a buy-and-hold strategy in this concentrated fund, which can test investors' patience if a stock takes awhile to gain and can lead to short-term volatility if a few picks go south. Feinberg's strategy is paying off this year. The top holding, at 10.6% of the portfolio, is reinsurer  Transatlantic Holdings . Not widely owned by the fund's category rivals, it's up 32.4% this year. The fund also has an 8% position in  American Express (AXP), which has almost doubled. Another top holding, State Bank of India, is up 61.1%.

The prudent, diversified approach of manager Jeff Arricale helped Analyst Pick  T. Rowe Price Financial Services (PRSIX) outpace 75% of its peers last year but also hasn't constrained it in 2009, as the fund is beating two thirds of its peers. Since the rally's March 9 start, it's up 104.9%. The fund's top 10 positions include firms such as J.P. Morgan, Goldman Sachs, and Morgan Stanley, but it also holds real estate investment trusts and insurers like  Aon Corp. (AOC). He'll also venture outside financials. His biggest position outside the sector is top-15 holding  Cigna (CI). The managed-care provider is up 76.5% for the year to date.

Even the worst performers in the category since March 9 are still doing well in absolute terms. Legg Mason Barrett Financial Services (SBFAX) is up 46.2% since the rally's start, but that's dwarfed by the category's 109.9% gain for that period. However, it lost less than 90% of its peers last year. The fund's biggest equity position is financial software firm S1 Corporation, which is up 20.8% since March 9 but down about that much for the year overall. The fund skips giant banks like Goldman Sachs and J.P. Morgan and instead owns a good chunk of smaller-cap names. The portfolio is dotted with a number of regional banks that have struggled this year. It has also been held back by its 10% cash stake.

Schwab Receives Wells Notice
In an Oct. 14 filing, Charles Schwab announced it had received a Wells notice from the SEC. The notice alerted Schwab to potential civil enforcement action against its  Schwab YieldPlus  and Schwab Total Bond Market  funds because of possible securities law violations. A Wells notice gives companies a chance to respond to the SEC before the agency decides how to proceed.

YieldPlus lost 35.4% in 2008. Its prospectus had said that it would experience "minimal changes in price."

Magellan Continues Loading Up on Gold
Harry Lange, the veteran manager at the $24.8 billion  Fidelity Magellan (FMAGX), has been buying gold since the beginning of 2009 and has increased his stake in recent months. Currently, gold mining companies constitute about 7%-8% of the portfolio. Senior fund analyst Christopher Davis says Lange's investments in gold mining companies reflect his concerns about inflation and the health of the U.S. dollar, and the manager believes it should help reduce the fund's volatility because gold prices aren't tightly correlated with the broad market.

A Slew of Manager Changes and a Liquidation
Scott Hazen is no longer a portfolio manager for  UBS US Equity Alpha ,  UBS US Large Cap Equity , and UBS US Large Cap Value Equity . The rest of the portfolio-management teams at these funds will remain the same.

Gary W. Lisenbee is off the portfolio-management team of UBS PACE Small/Medium Company Value Equity (PEVAX).

Pending approval by shareholders, the John Hancock Small Cap  will merge into  John Hancock Small Cap Equity , resulting in a subadvisor change from Lee Munder Capital to MFC Global Investment Management.

John Mahedy is leaving the portfolio-management team of  AllianceBernstein Value (ABVAX).

Richard Rocke is no longer a co-portfolio manager of HighMark Core Equity  and HighMark Small Cap Advantage (HSAAX).

Thomas C. Goggins was added to the portfolio-management team of  John Hancock Strategic Income (JHFIX).

Constantin Filitti and Timothy Schwider joined lead portfolio manager Jordan Low on the Credit Suisse Quantitative Equities Group. The team oversees multiple funds, including Credit Suisse Large Cap Blend ,  Credit Suisse Large Cap Growth , Credit Suisse Large Cap Value ,  Credit Suisse Mid-Cap Core , and  Credit Suisse Small Cap Core .

Peter Scott Smith replaces Daniel T. Vande Velde as a portfolio manager of Lord Abbett Connecticut Tax-Free Income  , Lord Abbett New Jersey Tax-Free Income  (LANJX), Lord Abbett New York Tax-Free Income  (LANYX), Lord Abbett Georgia Tax-Free Income  , and Lord Abbett Pennsylvania Tax-Free Income  . Daniel S. Solender will remain as his comanager.

Tocqueville Asset Management replaces Dover Asset Management as subadvisor to The Dover Long/Short Sector . The fund has new portfolio managers, Thomas R. Vandeventer and Peter D. Shawn, and will change its name to The Market Neutral Fund.

Accessor Total Return  will be liquidated Dec. 1, 2009.

Fund analyst David Falkof contributed to this report.