Hussman Goes International
Plus, American Fund shareholders appeal excessive-fee decision, and more.
Plus, American Fund shareholders appeal excessive-fee decision, and more.
John Hussman, the manager of Hussman Strategic Growth (HSGFX) and Hussman Strategic Total Return (HSTRX), has launched a new international fund.
Hussman is running the fund with seed money until he is sure that his first international fund will be operationally ready to manage billions of dollars, as his other funds do. Hussman told Morningstar that he expects to open the fund for outside investment sometime this summer.
When he does, Hussman Strategic International Equity will be modeled after Hussman's successful $5.3 billion Strategic Growth. That fund is up 8.19% annualized since its 2000 inception through Dec. 31, 2009. The S&P 500 lost 1.04% annualized over the same period.
That fund owns stocks Hussman thinks are undervalued and uses various hedging techniques when Hussman thinks market valuation or market action is unfavorable. The new fund aims to beat the MSCI EAFE Index over a full market cycle.
Bill Hester, a senior financial analyst who has worked with Hussman for more than six years, will comanage the fund. This will be Hester's first manager job.
Fees will be high, at least initially. The fund will charge an expense ratio of 2.02%, according to a Sept. 8, 2009, prospectus. It requires a $1,000 minimum initial investment or $500 for IRAs or a gift to minor account.
To see the complete filing, click here.
Vanguard Changes Sector Benchmarks
Vanguard has changed the target benchmarks for 10 of its sector index funds and ETFs. The firm says the change, which became effective Feb. 26, will help ensure better index-tracking. The change follows a similar move Fidelity adopted on Jan. 1 for its actively managed sector funds.
Vanguard decided to make the switch so the funds would better track their underlying indexes. Under Internal Revenue Code, a mutual fund must have no more than 25% of assets invested in a single issuer in order to qualify for favorable tax treatment. Historically, some of the indexes Vanguard previously used, including the MSCI Consumer Staples Index, the MSCI Energy Index, and the MSCI Telecommunications Services Index, have been too concentrated to meet the IRS' standards.
To comply, Vanguard often had to underweight certain large index holdings, which caused the funds' performance to diverge from that of their benchmarks, a no-no for index funds. The new MSCI indexes are less top-heavy and designed to comply with the IRS' rules.
Below is a list of the funds affected (fund name; mutual fund ticker; ETF ticker; new index):
Vanguard Consumer Discretionary Index Fund; (VCDAX); (VCR); MSCI US Investable Market Consumer Discretionary 25/50 Index
Vanguard Consumer Staples Index Fund; (VCSAX); (VDC); MSCI US Investable Market Consumer Staples 25/50 Index
Vanguard Energy Index Fund; (VENAX); (VDE); MSCI US Investable Market Energy 25/50 Index
Vanguard Financials Index Fund; (VFAIX); (VFH); MSCI US Investable Market Financials 25/50 Index
Vanguard Health Care Index Fund; (VHCIX); (VHT); MSCI US Investable Market Health Care 25/50 Index
Vanguard Industrials Index Fund; (VINAX); (VIS); MSCI US Investable Market Industrials 25/50 Index
Vanguard Information Technology Index Fund; (VITAX); (VGT); MSCI US Investable Market Information Technology 25/50 Index
Vanguard Materials Index Fund; (VMIAX); (VAW); MSCI US Investable Market Materials 25/50 Index
Vanguard Telecommunications Services Index Fund; (VTCAX); (VOX); MSCI US Investable Market Telecommunications Services 25/50 Index
Vanguard Utilities Index Fund; (VUIAX); (VPU); MSCI US Investable Market Utilities 25/50 Index
Besides lowering tracking error, the new indexes could reduce the funds' turnover and trading costs, Vanguard said.
American Fund Shareholders Appeal Excessive-Fee Decision
The plaintiffs who recently lost their excessive-fee case against Capital Research and Management Company, the investment advisor to the American Funds, have appealed the decision to the U.S. Court of Appeals for the Ninth Circuit.
The attorney for the plaintiff, Janine Pollack of law firm Milberg LLP, told Morningstar that because their brief to the court is due in July, she expects the case will be decided under whatever legal standard the Supreme Court decides to use in another high-fee case, Jones v. Harris Associates. The Jones decision is expected in the next few months.
Etc.
American Funds created the most wealth for shareholders over the past decade--to the tune of $190 billion, according to a recent Morningstar study of fund company assets and fund flows. To read the full report, click here.
First Eagle Investment Management, LLC, advisor to the First Eagle Funds, promoted Kimball Brooker Jr. to associate portfolio manager of First Eagle Overseas (SGOVX) and First Eagle U.S. Value (FEVAX).
Hartford U.S. Government Securities merged into Hartford Inflation Plus (HIPAX) as of Feb. 19; the fund company does not anticipate any changes in the surviving fund's fees. The same manager runs both funds.
AllianceBernstein Focused Growth & Income has changed its name to AllianceBernstein Core Opportunities (ADGAX). It also capped its Class A shares' expense ratio at 1.35%.
Mark Finn replaced David Giroux on the portfolio-management team of T. Rowe Price Institutional Large Cap Value (TILCX).
Rick Brandt joined David Wang as co-portfolio manager of Nuveen Symphony Large-Cap Growth , Nuveen Symphony Large-Cap Value , Nuveen Symphony Mid-Cap Core , Nuveen Symphony Small-Mid Cap Core , and Nuveen Symphony Optimized Alpha . Also, John Simmons replaced Thomas Richards as portfolio manager of Nuveen Growth Allocation , Nuveen Moderate Allocation , and Nuveen Conservative Allocation .
Winslow Green Solutions will liquidate all assets by March 31, 2010.
Van Kampen Global Growth will no longer offer R shares.
On April 30, 2010, Firsthand e-Commerce (TEFQX) will change its name to Firsthand Technology Opportunities. The fund's board of directors approved a new strategy that allows the fund to invest at least 80% of the portfolio in high-technology companies and removes the requirement to hold e-commerce companies.
Keystone Large Cap Growth (KLGAX) removed the fund's front-load fee and lowered its 12b-1 fee to 0.25% from 0.30%. Net expenses for the A shares dropped to 1.45% from 1.50%.
Fund analyst David Falkof contributed to this column.
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