Fidelity Closes 3 Funds, Opens 5 More

Fidelity announced plans to close three funds to new investors in October, as it mulls the possibility of merging or liquidating them.  Fidelity Fifty , the largest of the three, is one of two concentrated funds managed by Steve DuFour. Fidelity is considering merging the fund into another offering, pointing out that it is not well differentiated from the rest of the company's lineup. That fund lost almost half its value in the 2008 financial crisis thanks to outsized sector bets. Although it has rebounded since DuFour took over in March 2011, it continues to struggle with outflows. The other two funds to close, Fidelity Tax Managed Stock  and Fidelity 130/30 Large Cap , have likewise struggled with recent outflows. Fidelity is considering merging the former into an existing fund and merging or liquidating the latter.

Meanwhile, the company is adding five new actively managed strategies to its Series group of funds, a lineup designed specifically for use in the company's Freedom Funds target-date series. The additions could significantly alter the complexion of the Fidelity Freedom target-date lineup, which has traditionally relied on indexlike funds.

Two of the funds will be led by star managers. Joel Tillinghast, who has run the Silver-rated  Fidelity Low-Priced Stock (FLPSX) for more than two decades, will manage the new value fund, Fidelity Series Intrinsic Opportunities. Although Tillinghast made his name as a mid-cap investor, the new fund's prospectus does not specify a target market capitalization. Will Danoff, who continues to manage the Silver-rated  Fidelity Contrafund (FCNTX) after two decades at the helm, will run the new Fidelity Series Opportunistic Insights. In keeping with the unconstrained strategy that Danoff has pursued successfully at his other charges, that fund will invest in both growth and value stocks. Both funds use the Russell 3000 Index as a benchmark, which could be a sign that both are pursuing an all-cap orientation.  

Of the remaining new offerings, Jim Morrow will lead Fidelity Series Equity-Income. Morrow has run Neutral-rated  Fidelity Advisor Diversified Stock (FDESX) since 2006 and took over  Fidelity Equity-Income (FEQIX) in 2011. Matthew Fruhan, who has run Bronze-rated  Fidelity Large Cap Stock (FLCSX) since 2005 and took over Fidelity Mega Cap Stock (FGRTX) in 2009, will run the new Fidelity Series Mega Cap. Fidelity Series Stock Selector Large Cap Value will be managed by a team including Bruce Dirks as lead portfolio manager, and Stephen Barwikowski, Justin Bennett, Laurie Bertner, Katherine Buck, Matthew Friedman, and John Mirshekari.

All of the funds except for Intrinsic Opportunities will be available through the Advisor Series platform as well.

The company has been doing some manager reshuffling at other funds as well. Tech and consumer stock analyst Gopal Reddy has joined Fidelity Advisor Growth Opportunities (FAGOX) as a comanager alongside Steve Wymer. According to Fidelity, Reddy will help Wymer source ideas and provide supplemental research, increasing the $2.6 billion fund's capacity to absorb new assets. However, Reddy won't be helping out at Wymer's other charge, the $43.6 billion behemoth  Fidelity Growth Company (FDGRX), which is currently closed to new investors.

At  Fidelity Emerging Markets (FEMKX), manager Bob von Rekowsky is stepping down. Sammy Simnegar, who has run Fidelity International Capital Appreciation (FIVFX) for the past four years, will replace him. Fidelity cited Simnegar's record of being a top emerging-markets stock-picker and running International Capital Appreciation as key reasons for his promotion.

The company has also added Acadian Asset Management as a subadvisor to Strategic Advisers Emerging Markets (FSAMX). Acadian's CIO, John Chisholm, will manage the firm's portion of the fund's assets, while Fidelity manager Wilfred Chilangwa continues to run the remainder of the fund.

ING Bids Tradewinds Farewell
ING voted this month to remove Tradewinds Global Investors as the subadvisor to ING Value Choice , ING Global Value Choice (NAWGX) and ING International Value Choice . The announcement makes ING the latest in a string of firms to drop Tradewinds as a subadvisor since the sudden departure of Tradewinds' cofounder and former chief investment officer David Iben last spring. (Morningstar reported on Iben's departure and the reaction in the fund industry here, here, and here.)

ING plans to take management of the funds in-house and merge two of the funds into other offerings. ING's chief investment officer for equities, Christopher Corapi, and comanager Robert Kloss, who currently manage ING Large Cap Value (IEDAX), will take over ING Value Choice from Tradewinds in November. Pending shareholder approval, ING hopes to merge the former Tradewinds fund into ING Large Cap Value in March. In anticipation of the merger, Corapi and Kloss will run the two funds identically until then.

David Rabinowitz, ING's head of equity research, along with comanagers Martin Jansen and Joseph Vultaggio, will take over the two international funds from Tradewinds in November. ING has invested substantially in its international equity platform over the past year, adding three new analysts in 2011. The firm ultimately plans to merge ING International Value Choice into ING Global Value Choice, so the two funds will also be run identically to one another pending shareholder approval for the merger. ING is renaming ING Global Value Choice as ING International Value Equity, which will remain the name of the combined strategy.

Investors should see fees drop by as much as 15-25 basis points at all three funds and can expect changes in style as well. While Tradewinds' managers often took significant sector overweightings and moved more freely across the capitalization spectrum, the ING team plans to stay close to its benchmarks in terms of sector allocation and maintain stricter style purity in the large-cap strategy.

Janus Shutters Worldwide Fund
 Janus Worldwide , once one of the most well-known growth funds in existence, is closing its doors, Morningstar reported Tuesday. Janus announced this week that the fund's board had voted to merge it with the analyst-run  Janus Global Research (JARFX) in January. Janus Worldwide riveted the world of stock investing with dramatic gains in the 1990s; its cumulative return from its May 1991 inception to the peak of the tech bubble in March 2000 was nearly triple that of its typical world-stock peer. But the fund suffered in the bear market of 2000-02 and has struggled to get back off the ground since, undergoing a string of manager changes. The fund's 3.8% loss from March 10, 2000, through today trails all but two peers in the world-stock category. George Maris, who has led Worldwide for the past year and a half with subpar results, will remain with Janus as the manager of  Janus Global Select (JORNX).

New York Life to Buy Cornerstone
New York Life announced that it will acquire a minority stake in Minneapolis-based Cornerstone Capital Management and that it plans to increase its ownership to a majority stake in seven years. Cornerstone currently manages $2.2 billion in assets, including 3-star-rated Keystone Large Cap Growth (KLGAX). As part of the acquisition, New York Life plans to add Keystone Large Cap Growth, which Cornerstone CIO Thomas Kamp has run since its 2006 inception, to its Mainstay lineup of mutual funds. (Kamp used to manage  AllianceBernstein Large Cap Growth (APGAX).) Pending shareholder approval, New York Life plans to rename the fund Mainstay Cornerstone Growth, keeping Cornerstone as the subadvisor, and later merge its own Mainstay Growth Equity  into the Cornerstone-led fund.

Etc.
GMO has launched GMO Risk Premium, which will invest primarily in put options on U.S. and foreign stock indexes and exchange-traded funds. Thomas Hancock and David Cowan, co-directors of GMO's quantitative equity division, will run the offering. Cowan, a former equity analyst who joined GMO in 2006, was promoted to his current post earlier this month after the previous co-director, Sam Wilderman, left to help run the firm's asset-allocation team, as Morningstar previously reported. The fund will also be included in the universe of underlying funds employed by several of GMO's allocation funds.

Jonas Svallin, who joined Schwab in February 2012 and leads Schwab's quantitative equity portfolio management team, is now listed as a comanager of  Schwab Core Equity (SWANX) alongside Larry Mano and Paul Alan Davis.

American Century has changed American Century Inflation Protection Bond's (APOAX) name to American Century Short Duration Inflation Protection Bond. The fund's new strategy is similar to its original one, but the managers are constrained to maintaining an average duration of 5.0 years or shorter.

A year after it hired long/short portfolio manager Kurt Feuerman away from hedge fund giant Caxton Associates, AllianceBernstein is launching AllianceBernstein US Select Long/Short Equity, which Feuerman will manage.

BlackRock is launching BlackRock Real Estate, which will invest primarily in domestic REITS and real estate operating companies. Sherry Rexroad, the company's CIO for global real estate, and Mark Howard-Johnson, who heads BlackRock's real estate securities team, will run the fund.

Paul Ma has stepped down from managing BlackRock Science & Technology Opportunities (BGSAX). Comanagers Thomas Callan, Jean Rosenbaum, and Erin Xie will remain onboard.

State Street Global Advisors is launching SSgA SSARIS Managed Futures Strategy, an open-end fund that will be run by State Street Absolute Return Investment Strategies director of research Paul Lucek and hedge fund manager Mark Rosenberg. The duo will invest in equities, fixed-income securities, and currencies using derivatives and will pick sectors according to a quantitative algorithm.

Columbia Management has hired Conestoga Capital Advisors to replace RS Investment Management as one of three subadvisors to Active Portfolios Multi-Manager Small Cap Equity . Conestoga CIO William Martindale and comanager Robert Mitchell will now manage Conestoga's sleeve of the fund, replacing RS' James L. Callinan. The fund's other subadvisors remain in place.

Federated has announced planned changes to the name and strategy of Federated Asset Allocation (FSTBX). Starting in December, the fund will be called Federated Global Allocation and will adopt new prospectus rules mandating that at least 30% of assets be invested in non-U.S. securities.

Altegris has launched a new fund, Altegris Fixed Income Long Short. In similar fashion to the firm's other offerings, the fund will be partly managed by an in-house team consisting of Altegris CEO Jon Sundt, CIO Allen Cheng, and comanager Matthew Osborne, and partly managed by one or more outside subadvisors. Currently, Rockview Management is the only listed subadvisor.

Nationwide has launched Nationwide Emerging Markets Equity, to be subadvised by Robeco managers Tim Dröge and Michael Strating.  

Credit Suisse has launched a new fixed-income fund, Credit Suisse Strategic Income CSOIX. John G. Popp, Credit Suisse's CIO for credit investments, and Thomas J. Flannery, head of the firm's high-yield management team, will run the fund along with comanagers Andrew Marshak, David Lerner, and Wing Chan.

AQR Risk Parity (AQRNX) will close to new investors on Nov. 16. Since its inception two years ago, the fund has grown to almost $1 billion in assets.

Jeffrey Jonas has joined Gabelli Asset (GABAX) as a comanager responsible for a slice of the fund's assets. Jonas has comanaged the closed-end fund Gabelli Healthcare & Wellness Trust (GRX) since 2007.

Nuveen has added a ninth fund to its lineup of strategies subadvised by Symphony Asset Management. Nuveen Symphony High Yield will be managed by Symphony's CEO and CIO Gunther Stein and fixed-income portfolio manager Jenny Rhee. The duo currently manages Nuveen Symphony Credit Opportunities (NCOAX).

John Thompson is stepping down from the team managing Touchstone Conservative Allocation , Touchstone Balanced Allocation , Touchstone Moderate Growth Allocation , and Touchstone Growth Allocation . His comanagers at subadvisor Ibbotson Associates (a wholly owned subsidiary of Morningstar, Inc.) will continue to run the funds.

Pyxis plans to combine several of the smaller funds in its lineup by the end of September. Pyxis Short-Term Government  and Pyxis Government Securities  will merge into Pyxis Fixed Income (HFBAX).  Pyxis International Equity  will merge into Pyxis Global Equity , and Pyxis U.S. Equity  will merge into Pyxis Core America Equity .

John Leonard has stepped down from running UBS U.S. Equity Alpha . Ian McIntosh, who also joined UBS Equity Long-Short Multi-Strategy  earlier this month, will replace him. Comanagers Scott Bondurant and Thomas Digenan will remain onboard. Leonard remains UBS Global Asset Management's global head of equities.

Nomura is launching its first open-end bond fund in the US, Nomura High Yield. It will be managed by David Crall, who helps run the company's high-yield department, and comanager Stephen Kotsen.

Northern Funds is reshuffling subadvisors at two of its Multi-Manager funds. WestEnd Advisors will replace Marsico Capital Management in running a slice of Northern Multi-Manager Large Cap , while DDJ Capital Management will replace Stone Harbor Investment Partners in managing a slice of Northern Multi-Manager High Yield Opportunity (NMHYX).

Scott Kirby has joined Access Capital Community Investment (ACCSX) as a comanager alongside Brian Svendahl.

Senior mutual fund analysts Greg Carlson and Christopher Davis, mutual fund analyst Shannon Kirwin, and ETF analyst Robert Goldsborough contributed to this report.