RS Investments Picks Up a Gem

RS Investments will take over the small, underappreciated  Oak Value  .

RS said Oak Value Capital Management, Inc.'s portfolio management team will join the San Francisco-based money manager. The Chapel Hill, North Carolina-based Oak Value will bring the Oak Value fund it advises with it. Though RS will let the managers stay in North Carolina, it will rename the fund RS Capital Appreciation in September if shareholders approve the transaction. Existing shareholders will be transferred into a front-load waived A share class.

One immediate benefit for shareholders will be lower fees. RS, which manages $15 billion in assets, has contractually agreed to lower the fund's expense ratio until April 2012 to around 1.25%. Its 2009 expense ratio was 1.57%.

Terry Otton, chief executive officer of RS Investments, and the portfolio managers of the Oak Value fund told Morningstar the same investment team will still run the fund. They will continue to use the same strategy, which is grounded in value tenets but often leans into blend or even growth arenas, depending on where the managers see opportunity.

Oak Value has an impressive record but has struggled to gain assets. In fact, its asset base has declined in recent years, even as performance has improved. Its current level of $75 million is down from more than $390 million in 1999 and nearly $240 million at the end of 2005. The employee-owned firm founded in 1986 has a total of $190 million under management.

The fund has returned 2.49% per year during the past 10 years and 7.55% during the past 15 years through June 22. That handily beats the S&P 500's 0.97% 10-year loss and 6.59% 15-year gain. The 10-year return lands in the top quartile of the large-blend category. It also trounces the returns of RS's two large-cap funds.  RS Large Cap Alpha (GPAFX), the firm's large-value fund, has lost 2.68% annualized during the past 10 years while  RS Growth (RSGRX) has shed 2.74%.

Arbitrage Fund to Close to New Investors
 Arbitrage Fund (ARBNX), which specializes in merger and acquisition investment situations, will close to new investors on Monday, July 19.

The fund is approaching its 10-year anniversary and has about $1.4 billion in assets, double the roughly $700 million in assets it had at end of 2009 and 7 times the $200 million it had at the end of 2008.

As assets ballooned over the years, the fund's expense ratio has remained the same. The fund charged an above-average 1.95% until recently. (The fund's advisor agreed to cap fees at 1.69% for the fund through August 2015.)

The fund's long-term record is above average: It returned 4.72% annualized over the past five years through June 22 compared with 4.35% for the average fund in the category.

Etc.
Effective July 1, Anna Davydova has been named sole portfolio manager on Fidelity Select Environmental Portfolio (FSLEX), which she has managed since March 1, 2010, with Douglas Simmons. Davydova joined Fidelity in 2005 as a research analyst covering coal, small-cap oil services, and oil tankers. In 2007, she began covering the alternative energy sector.

Matthew Cohen is off the portfolio management team of  Acadian Emerging Markets (AEMGX).

Anne Unflat replaced Maureen Donnellan on the portfolio management team of Invesco Structured Core (SCAUX).

John McLanahan joined the portfolio management team of  Putnam International Capital Opportunities (PNVAX).

Effective July 26, 2010, the Trust share class of  Neuberger Berman Focus (NBFCX),  Neuberger Berman Partners (NBPTX), and  Neuberger Berman Regency (NBREX) will close to new investors.

On Aug. 27, 2010, FBR Pegasus Small Cap Growth  will merge into FBR Pegasus Small Cap .

ActivePassive Small/Mid Cap Value  will liquidate all assets by Aug. 16, 2010.

Fund analyst David Falkof contributed to this report.