Royce Launches New Mid-Cap Fund
Plus, a shocking week for the fund industry.
Plus, a shocking week for the fund industry.
Royce announced the launch of its first mid-cap fund, Royce Mid-Cap. It will invest primarily in the equity securities of companies with market capitalizations from $2.5 billion to $15 billion that Royce believes are trading below its estimate of the firms' current worth.
This is a big step up from the smaller companies Royce typically focuses on. Royce SMid-Cap Value , for example, focuses on companies with market caps between $500 million and $10 billion.
As is typical with most of Royce's funds, this fund will generally invest in companies that have excellent business strengths, have high internal rates of return, and exhibit above-average prospects.
The portfolio management team includes Carl Brown, Brendan Hartman, James Stoeffel, and W. Whitney George. Its expense ratio will be capped at 1.49% though April 30, 2012.
Royce's fund lineup has performed well in recent years, particularly in 2008. Charlie Dreifus, manager of Royce Special Equity Investment (RYSEX), is a nominee for Morningstar's Domestic-Equity Manager of the Decade award.
A Shocking Week for the Fund Industry
The mutual fund industry is ending 2009 with a bang. TCW's former star manager Jeffrey Gundlach, a candidate for Fixed-Income Manager of the Decade, has been all over the news. First, he left TCW. Then he announced the launch of his new firm Doubleline. That left TCW Total Return (TGLMX) shareholders wondering, "Should I stay or should I go?" To which Morningstar's head of fixed-income research Eric Jacobson answered, it's safe to stay. Meanwhile, the possibility of investors leaving in droves to follow Gundlach has so far turned out to be not as big an issue as feared.
There were other surprises this week T. Rowe's (TROW) new head of fixed income raised more questions than he answered. AMG bought Aston funds. And the fund industry lost a legend when Tweedy, Browne's Chris Browne died of a sudden heart attack.
Wells Fargo Loses Bond Manager to Loomis Sayles
Loomis Sayles recently named Bill Stevens, a long-tenured comanager at Wells Fargo Advantage Total Return Bond (MBFAX) and Short-Duration Government (MSDAX), a vice president and portfolio manager.
Stevens will help lead an effort to broaden Loomis Sayles' fixed-income lineup. In a statement, the firm said it plans to launch and manage a core bond strategy focused on relative outperformance of a benchmark index while managing volatility. This differs from many of the firm's existing offerings, including veteran bond manager Dan Fuss' flagship Loomis Sayles Bond (LSBRX), which have smashed their benchmarks over time but with higher levels of volatility. Fuss is another nominee for Fixed-Income Manager of the Decade.
Second Oppenheimer 529 Settlement Is Biggest Yet
New Mexico announced a $67.3 million settlement with OppenheimerFunds regarding the firm's alleged mismanagement of the state's 529 program. The state runs two 529 plans, the Education Plan and Scholar's Edge.
This announcement comes on the heels of Oregon's $20 million settlement a few weeks ago.
Greg Brown, Morningstar's lead fund analyst on 529 plans, says it is likely there will be continued settlements regarding Oppenheimer Core Bond's (OPIGX) role in 529 plan losses last year. There is still no final resolution regarding the state of Illinois' 529 plan, which was heavily affected by Core Bond's losses.
As the fund's name implies, it was intended to serve as a core bond holding for many plans' popular age-based options. The fund lost nearly 36% of its value last year, while the typical intermediate-term bond fund lost 4.7%.
BlackRock Housecleaning
BlackRock (BLK) announced several funds will switch their benchmarks away from their current S&P indexes to MSCI. BlackRock Global Growth and BlackRock Global Opportunities (BROAX) will use the MSCI All Country World Index. BlackRock International Opportunities (BREAX) will use the MSCI All Country World Index Ex-U.S. And BlackRock US Opportunities (BMEAX) will use the Russell Midcap Index. The firm has been taking steps to insure the benchmarks and benchmark descriptions of its mutual funds are consistent throughout its lineup.
In other BlackRock news, Anthony Forcione and Kate O'Connor replaced Wayne Archambo as co-portfolio managers of BlackRock Mid-Cap Value (BMCAX) and BlackRock Small Cap Core . Archambo was also a manager on Small Cap Value , which will liquidate along with BlackRock International Diversification by Feb. 11, 2010. Both small-cap funds have had dismal performance recently.
Etc.
Third Avenue Value (TAVFX) manager Marty Whitman is on America's highest paid board. Nabors Industries (NBR) is also a large holding of the fund.
FBR announced it will acquire AFBA 5Star, a firm will approximately $200 million in assets under management.
American Century closed its Small Cap Value Fund (ASVIX) to new investors on Dec. 15. It reopened in April 2009 after more than seven years of being closed. After reopening the fund, assets grew by approximately $700 million, pushing the fund past its stated capacity of $1.5 billion.
RS announced fee reductions for two of its funds. RS Value (RSVAX) will now levy a 1.28% expense ratio, down from 1.40%. RS Investors (RSINX) shareholders will see a more significant reduction: It will now charge 1.30%, down from 1.98%.
Upon approval by the SEC, Northern Small Cap Growth (NSGRX) will change its strategy and style from fundamental small-cap growth to a quantitative small-cap core. The fund also will change its name to the Small Cap Core Fund. Northern Small Cap Value (NOSGX) already uses a quantitative strategy. That fund, unlike many other quantitative funds, lost less than its peers in 2008.
PIMCO's Bill Gross is taking over management duties for four closed-end funds: PIMCO Corporate Income (PCN), Corporate Opportunity (PTY), Floating Rate Income (PFL), and Floating Rate Strategy (PFN).
Jennison and Dreyden funds will be rebranded with the Prudential (PRU) name sometime in February 2010.
Aberdeen Global Utilities , Aberdeen Health Science , and Aberdeen Technology & Communications will liquidate all assets by Feb. 26, 2010.
Nuveen Symphony All-Cap Core and Nuveen Santa Barbara Growth Opportunities will liquidate by March 4, 2010.
Shareholders of Monteagle Large Cap Growth are being asked to approve a merger of the fund into Monteagle Quality Growth .
Daniel Barton joined James Welch as comanager of (DRNJX).
E. Clifton Hoover replaced F. James Hutchinson as co-portfolio manager of DWS Dreman Mid Cap Value (MIDVX).
Andrew Harding replaced Brendan Burke on the portfolio management team of PNC Total Return .
Joshua Marston joined the management team of MFS Research Bond (MRBFX).
Fidelity Strategic Advisers Value appointed Brandywine Global Investment Management and LSV Asset Management as new subadvisors to the fund. They will each manage a portion of the fund alongside current subadvisors Cohen & Steers Capital Management, Eaton Vance Management, and Pyramis Global Advisors.
Fund analyst David Falkof contributed to this report.
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