Fairholme Launches Third Mutual Fund

Morningstar Domestic-Stock Fund Manager of the Decade Bruce Berkowitz's Fairholme Capital plans to launch an asset-allocation fund, according to regulatory filings made this week.

The proposed Fairholme Allocation will be the firm's third mutual fund and second that it has launched this year. In January, it rolled out the  Fairholme Focused Income (FOCIX) bond fund.

At first glance, the new offering doesn't sound that different from the firm's $16.7 billion flagship  Fairholme (FAIRX) fund. Like its sibling, the new fund can invest in a focused portfolio of stocks, bonds, and cash based on management's assessment of fundamental values. There are no restrictions on the fund's allocations to these asset classes, nor are there limitations based on market cap, sector, region, maturity, or credit quality. However, Fairholme Allocation is better positioned to invest in smaller securities that would no longer move the needle at the massive Fairholme fund.

The new fund's expense ratio of 0.75% includes a 25-basis-point waiver that will last through at least the end of 2011. Fairholme fund charges 1.00% and Fairholme Focused Income charges 0.50%. Like Focused Income, Allocation has a $25,000 investment minimum. Fairholme requires $10,000.

Fidelity Expands Manager's Duties
Fidelity Investments will replace manager Charles Hebard at the underperforming  Fidelity Blue Chip Value (FBCVX) with Michael Chren on Nov. 1. Chren has run another large-value Fidelity offering, Fidelity Series Large Cap Value , since February 2009. In that short time, the fund has lagged both the category and the Russell 1000 Value Index. Prior to joining Fidelity in 2009, his experience included portfolio management duties at Allegiant Asset Management and Invesco.

Hebard has run Blue Chip Value for a little more than three years, and in that time it has lost 11.7% annually, placing it in the bottom decile of large-value funds. Stock selection has hurt this fund's benchmark-centric approach, and it has also trailed the Russell 1000 Value Index by more than 3 percentage points over that period.

Etc.
Saumen Chattopadhyay, who had served on the investment committee overseeing Harbor Funds' target retirement fund series and had day-to-day responsibility for the series, has left the firm. Committee member Paul C. Herbert will take over the day-to-day role.

The board of trustees of Highland All Cap Equity Value  has approved the liquidation of the fund.

David Kruth is no longer portfolio manager of Goldman Sachs Real Estate Securities (GREAX). James Otness and new managers Nora Creedon and Timothy Ryan now manage the fund.

John Hancock Funds II Strategic Bond  is now closed to unscheduled new investments.

Kayode Aje has joined the portfolio management team of Legg Mason Capital Management Disciplined Equity Research .

Subject to shareholder approval, the board of trustees of ING BlackRock Large Cap Value  approved a proposal to reorganize the fund into ING T. Rowe Price Equity Income (ITEIX).

The board of trustees of ING Lord Abbett Growth and Income  approved a proposal to reorganize the fund (subject to shareholder approval) into ING Pioneer Equity Income (IPEIX). On Sept. 30, 2010, the board of trustees of ING Pioneer Equity Income approved a proposal to change the fund's subadvisor from Pioneer Investment Management to ING Investment Management Co., ING Investment Management Advisors, and ING Investment Management Asia/Pacific. Finally, ING Pioneer Equity Income will be renamed ING Large Cap Value.

On Jan. 21, 2011, T. Rowe Price will take over subadvisory responsibilities for ING Marsico International Opportunities . The fund's name will also change to ING T. Rowe Price International Stock.

The board of trustees of  Hatteras Alpha Hedged Strategies  and Hatteras Beta Hedged Strategies  has appointed ISF Management as subadvisor to a portion of the funds' underlying strategies.

Russell Investments, which utilizes multiple subadvisors to run each of the funds in its lineup, recently announced some changes, including the addition of DDJ Capital Management to the team at Russell Global Credit Strategies, joining Stone Harbor Investment Partners and Oaktree Capital Management.

MacKay Shields is no longer subadvisor to Columbia High Income  effective Oct. 27, 2010. The fund is now advised by Columbia Management Investment Advisers. Brian Lavin will be the portfolio manager of the fund.

Invesco Developing Markets (GTDDX) will close to most new investors on November 22, 2010.

Director of mutual fund research Russel Kinnel and mutual fund analyst Kailin Liu contributed to this report.