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Fund Times

DWS Deal Nears Finish Line

Goldman Sachs loses a value manager and more.

A long-awaited deal for DWS' mutual fund assets may be near.  Deutsche Bank (DB) could sell its U.S. asset-management business as soon as mid- to late-April to Guggenheim Partners, according to several media reports. DWS declined to comment.

The business has about $535 billion in retail and institutional assets, including $46 billion in Deutsche's U.S. mutual fund arm, DWS Investments. It had been on the auction block for nearly four months when Deutsche announced on Feb. 28, 2012, that it was in exclusive negotiations with Guggenheim. Although Deutsche Bank has made no official announcements, news reports suggest Guggenheim could close the deal by the end of April, with an estimated price tag of roughly $2 billion. The deal would quintuple Guggenheim's $125 billion asset base.

Given that Deutsche Bank is retaining its European and Asian asset-management divisions, it's not yet clear how a deal would affect DWS Investments' mutual funds. DWS' management ranks are far-flung, with portfolio managers working in New York; Boston; Louisville, Ky.; and Frankfurt. If a deal goes through, the managers outside the United States could move to Guggenheim, stay with DWS' overseas operations, or be retained by the funds' board of trustees in a subadvisory capacity. DWS declined to comment on those scenarios.

Goldman Sachs Loses Value Manager
 Goldman Sachs Mid Cap Value (GCMAX) comanager Scott Carroll, a managing director and veteran member of the firm's value equity team, has resigned. This is the team's fourth departure since 2008. The team not only has lost a manager but also its consumer staples and utilities sector specialist. Carroll's is the latest in a string of Goldman Sach's manager departures in recent years.

Carroll's teammate will divide his duties and sector responsibilities at Goldman Sachs Mid Cap Value, which received a Morningstar Analyst Rating of Neutral, and other funds. Sally Pope Davis, comanager of Neutral-rated  Goldman Sachs Small Cap Value (GSSMX), will cover utilities for that fund. Eric Fogarty, an analyst on the value team, will cover the sector for  Goldman Sachs Large Cap Value (GSLAX) and Mid Cap Value. Michael Ho will take on the consumer staples coverage responsibilities for Mid Cap Value.

First-Quarter Wrap-Up: Growth Funds Riding High
The S&P 500 Index's 12.6% return in the first quarter of 2012 has many investors exhaling a sigh of relief after a tense 2011. Indeed, many mutual funds enjoyed a bounce in the first three months of the year.

The average first-quarter return of 31 categories was good enough to make up for all of their individual calendar-year losses in 2011. For example, the technology category's 20.8% average gain in the first quarter was tops among Morningstar's 21 domestic-stock fund categories and up from its 7.6% 2011 loss. Large-cap growth funds benefited from the gains in that sector as well, returning an average 15.8% for the first quarter, more than 4 percentage points ahead of their large-cap value cousins. The large-cap growth group dropped 2.5% on average last year.

The upswing in performance has lifted many funds that were recently in the doghouse.  Putnam Voyager and  Hartford Growth Opportunities (HGOAX) clocked in a 20.9% and 21.4% return, respectively, ranking them in the top 5% of the large-cap growth category for the period. Both funds were in the bottom decile of that same category in 2011. Their performance turnarounds (albeit short) can be attributed, in part, to  Apple (AAPL), a top holding in both funds. The shares of the technology giant jumped 48% in the first quarter because of strong product demand and a new dividend policy.  

The rising equity market didn't lift all boats, though. Long-term government bonds, like many fixed-income categories, suffered a reversal of fortune. The category lost more than 6% in 2012's first quarter after a spectacular 32.9% 2011 gain driven by investors' flight to safety from tumultuous markets. And while the first-quarter bounce helped many funds, some like Putnam Voyager still have ground to make up after a painful 2011.  Fairholme's (FAIRX) 31.1% year-to-date gain through March 31 on the backs of its big financials sector stake and  Sears' astounding 115.7% gain still haven't made up for the fund's 32.4% loss in 2011. The fund's longer-term returns, however, remain near the top of the large-value category.



Manager Change at Stratton Funds
James Beers has stepped down as manager of Stratton Real Estate (STMDX) and Stratton Multi Cap (STRGX). A three-member team will replace Beers. It includes leader Andrew DiZio, a recent hire and former Janney Montgomery Scott REIT analyst; John Affleck, the firm's chief executive officer; and Shawn Gallagher, an analyst on Stratton Multi Cap and Stratton Small-Cap Value (STSCX). Gallagher will take the lead at Stratton Multi Cap with Affleck and DiZio as comanagers.

Etc.
Vanguard finished handing the reins of three municipal-bond funds to Jim D'Arcy. D'Arcy has been listed as one of two managers on  Vanguard CA Intermediate-Term Tax-Exempt (VCAIX),  Vanguard CA Long-Term Tax-Exempt (VCITX), and  Vanguard PA Long-Term Tax-Exempt (VPAIX) since July 2011 but now is listed as the sole manager. D'Arcy joined the firm from Columbia Management, a rare outside hire for Vanguard.

Invesco continues the process of streamlining its fund lineup. Shareholders recently approved the merger of Invesco High Income Municipal into  Invesco Van Kampen High Yield Municipal (ACTHX) as well as  Invesco U.S. Mid Cap Value into  Invesco Van Kampen American Value .

T. Rowe Price announced that  T. Rowe Price High-Yield (PRHYX) and T. Rowe Price Institutional High Yield (TRHYX) will close to new investors on April 30, 2012. The Silver-rated T. Rowe Price High-Yield has nearly doubled in size the past three years to roughly $9.4 billion in assets as of February 2012. Current investors may continue to invest in the funds.

Allianz's board of directors has approved hiring RCM Capital Management as the subadvisor for Allianz AGIC International Growth Opportunities (AOPAX). If the proposal is approved by shareholders, the team managing Allianz RCM Global Small-Cap (RGSAX) will take over portfolio management duties at this fund, and it will then be renamed Allianz RCM International Small-Cap.

Calamos is changing the name of its high-yield fixed-income fund to Calamos High Income from Calamos High Yield (CHYDX) on May 15, 2012.

UBS removed Thomas Cole as a portfolio manager on UBS US Large Cap Equity , UBS US Equity Opportunity , and UBS U.S Equity Alpha . According to the firm's filings, John Leonard, one of the funds' comanagers, will assume Cole's responsibilities. 

ING's board of directors approved merging ING Index Plus SmallCap into ING Index Plus MidCap (AIMAX) on or about July 21, 2012. The combined funds will be renamed ING SMID Cap Equity. In addition, ING Index Plus LargeCap was approved to merge into ING Corporate Leaders 100 (IACLX) on or about June 28, 2012.

Greg Mattiko is no longer listed as a portfolio manager on  JPMorgan Emerging Markets Equity (JFAMX). Lead manager Austin Forey and comanager and CIO Richard Titherington remain on the fund.

Columbia Floating Rate (RFRAX) added Ronald Launsbach to its portfolio management team. Launsbach joined the firm in 2001 and serves as the vice president and senior analyst of the leveraged debt group.

Christi Fletcher joins Carol Sullivan as comanager on Northern Ultra-Short Fixed Income (NUSFX). Scott Warner is no longer listed as portfolio manager on the fund.

Petros Bocray joined the portfolio management team at Wells Fargo Advantage Index Asset Allocation (SFAAX), replacing Gregory Genung. Bocray serves as a portfolio manager on several other funds managed by the quantitative strategies team.

RidgeWorth Small Cap Value Equity (SASVX)  will no longer be available to new investors effective April 20, 2012.

Senior mutual fund analyst Karin Anderson and mutual fund analysts Flynn Murphy, Kathryn Spica, and Rob Wherry contributed to this report. 

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