Oppenheimer, Goldman Sachs Exit Target-Date Industry

The target-date industry is getting a little smaller. Oppenheimer and Goldman Sachs are merging away and liquidating their respective lineups. Their exits are more proof that even as assets flow into these offerings, the target-date industry is dominated by a few large players.

Oppenheimer's Transition Target-Date series, which carried a Bottom rating, had about $640 million in assets at the end of March 2012.  Oppenheimer Transition 2030 ,  2040 , and  2050 funds will merge with Oppenheimer Active Allocation . That fund has roughly a 70%/30% mix of stock and bonds. It has lost an annualized 3.3% the past five years, landing it near the bottom of the aggressive allocation category.  Oppenheimer Transition 2015 ,  2020 , and  2025 will merge with Oppenheimer Moderate Investor , which features a 55%/45% mix of stocks and bonds and a similarly disappointing record. The lineup's  2010 fund will be merged into Oppenheimer Conservative Investor . All three balanced funds are run by Oppenheimer's asset-allocation team, which also oversaw the target-date lineup.

Pending board approval, Goldman Sachs will liquidate its Retirement Strategy lineup later this year. Shares of the series will no longer be available for purchase as of July 27, 2012. The series, which was launched in 2007, had a lackluster three-year record that landed the individual funds in the bottom of their respective groups. Morningstar did not assign a rating to this lineup.

The firms' decisions show how difficult it is to succeed in the target-date space, where a few large players have dominated inflows. To survive, fund companies not only have to have distinct funds with good performance but low fees, too. Fidelity, Vanguard, and T. Rowe Price accounted for 75% of the $379 billion in assets housed in target-date lineups at the end of 2011.

Calamos Hires Value Team
Calamos Investments, a mutual fund company known primarily for its growth investing strategies, is now placing greater emphasis on its value offerings, too. The firm has hired three value equity managers away from American Independence Capital Management. Key among them is Jeff Miller, a manager on American Independence Stock since 2007 and chief strategist at AICM. His colleagues Tammy Miller and Ariel Fromer will also join Calamos. The trio will take responsibility for the stock-picking at Calamos Value . John Calamos Sr. and Nick Calamos, co-CIOs of the firm, will remain on the fund as comanagers, responsible for the macro strategy. The other comanagers currently on the fund remain at the firm running other offerings. Miller and his comanagers leave behind a stellar record: American Independence Stock returned an annualized 3.8% under Miller's tenure, beating 98% of unique peers in the U.S. large-blend category.

Franklin Names New Comanagers
Franklin Resources, the parent firm of the Franklin, Templeton and Mutual Series fund families, announced several changes to its manager ranks. Grace Hoefig has been named as a comanager on  Franklin Balance Sheet Investment and Steven Raineri has been pegged to help run Franklin Small Cap Value . In both cases, the new comanagers join a team that has guided the respective funds since their inceptions. Hoefig has been at Templeton since 2008 and was previously a managing director at AXIA Capital Management. Raineri has been at Franklin for seven years. He currently comanages Franklin All Cap Value .

John Hancock Shuffles Managers
John Hancock announced it has added RS Investment Management as a second subadvisor on John Hancock Natural Resources , joining Wellington Management. Each firm will run 50% of the fund's assets. At the same time, John Hancock also changed the fund's benchmark index to a 60%/40% split between MSCI World Energy and MSCI World Metals & Mining from a 60%/30%/10% combination of MSCI World Energy, MSCI World Metals & Mining, and MSCI World Paper & Forest Products.

Legg Mason Proposes Mergers
As part of its rebranding effort, Legg Mason has asked shareholders to approve four fund mergers. Three of the mergers combine funds with similar mandates and identical management teams:  Legg Mason Western Asset Core Bond ,   Legg Mason Western Asset Core Plus Bond , and Western Asset Limited Duration Bond will merge into  Western Asset Core Bond ,  Western Asset Core Plus Bond , and Legg Mason Western Asset Limited Duration Bond , respectively. The resulting funds will drop the Legg Mason name.

The fourth proposed merger combines two funds with significantly different mandates.  Legg Mason Western Asset Global Inflation Management , a global inflation-protected strategy that most recently held more than half of its assets in non-U.S. securities, is to merge into Western Asset Inflation Indexed Plus Bond , which invests primarily in U.S. Treasury Inflation-Protected Securities. Morningstar doesn't cover either of these offerings.

Etc.
Managers is dropping fees for Managers Global Income Opportunity , Managers Real Estate Securities , and Managers AMG Chicago Equity Partners Balanced by 11, 14, and 16 basis points, respectively. 

UBS plans to sell  UBS Global Equity and UBS High Yield to Nationwide, citing the asset manager's superior distribution network. Pending shareholder approval of the deal, Nationwide intends to keep UBS on as the subadvisor to the two funds. Both funds will close to investors on July 16, 2012. 

Christopher Wightman, a former global fixed-income strategist for J.P. Morgan, has joined the team at First International Advisors helping run  Wells Fargo Advantage International Bond and Wells Fargo Advantage Emerging Markets Local Bond .

J.P. Morgan plans to cut expenses by 9 basis points for the A, C, and Select share classes of JP Morgan US Dynamic Plus and JP Morgan US Large Cap Core Plus . 

 Columbia Small Cap Value I Class is closed to new investors. 

The fund board at Morgan Stanley has approved a fee cap for Morgan Stanley Mortgage Securities .  

Touchstone is seeking shareholder approval to merge Touchstone Emerging Markets Equity II into its older sibling, Touchstone Emerging Markets Equity . Both funds are managed by the same team and follow similar strategies.  

ASTON has removed M.D. Sass Investors Services as a second subadvisor on ASTON/MD Sass Enhanced Equity . Anchor Capital Advisors will remain as the sole subadvisor, and the fund's name will change to ASTON/Anchor Capital Enhanced Equity.

Chris Turner, an emerging markets specialist and former hedge fund manager with EMSO Partners, has joined Andrew Brudenell as a comanager at HSBC Frontier Markets .

Steven Catricks, Kelley McKee, and Kent Madden, three equity analysts with Delaware Management Company, have been promoted to comanagers of Delaware Small Cap Value and Delaware Mid Cap Value alongside the funds' current manager Christopher Beck.  

Karen Gemmett, a structured finance and mortgage strategist with Standish Mellon, has joined Dreyfus Basic US Mortgage Securities as a comanager. Nate Pearson, an interest-rate and derivatives strategist with the firm, has joined Dreyfus US Treasury Intermediate Term and Dreyfus US Treasury Long-Term as a comanager. Robert Bayston, currently the sole manager on all three funds, will remain at the helm of each.

Palmer Square Absolute Return has added Turner Investments as a subadvisor.

Destra plans to liquidate Destra Next Dimension , a $6 million world-stock fund headed by Roger Ibbotson since its inception in 2010.

Dwindling assets have finally forced the one star-rated YieldQuest Total Return Bond to cease operations. The fund has generated an annualized return of negative 20.6% since its 2005 inception. 

Mutual fund analysts Shannon Kirwin and Rob Wherry contributed to this report.