Arrowpoint Partners Buys Aster Investment Management

Arrowpoint Partners, the Denver-based investment firm, announced it is buying Aster Investment Management, or AIM, the advisor behind the Meridian Funds. The price of the deal was not disclosed.

The acquisition marks a return to the mutual fund world for David Corkins, Arrowpoint's founder and the former well-regarded portfolio manager of  Janus Fund , Janus Mercury (now Neutral-rated  Janus Research (JRAAX)) and Neutral-rated  Janus Growth & Income (JDNAX). He formed Arrowpoint in 2007 after resigning from Janus, which was a blow to that firm at the time, as he generated fine records at his charges, and which was followed by other high-profile departures. Indeed, Arrowpoint's small but growing staff includes several Janus alumni such as Chad Meade and Brian Schaub, who comanaged Neutral-rated  Janus Triton (JGMAX) between 2006 and 2013 and  Janus Venture (JVTAX) from 2010-13 to strong records that easily exceeded the results of their small-growth peers. Up until now, Arrowpoint had been managing $2.2 billion in assets in separate and institutional accounts. Meridian's $2.9 billion will double the assets under management and give the firm access to retail investors.

For Meridian, the deal marks an end to a tumultuous 16 months for the firm. In February 2012, Meridian's founder, Richard Aster, died unexpectedly. In the wake of his death, AIM installed Neutral-rated  Meridian Value's (MVALX) lead manager Jamie England as the lead on Neutral-rated  Meridian Growth (MERDX) and  Meridian Equity Income (MEIFX). The funds' board then canceled AIM's contract and rehired it on an interim basis until shareholders could approve a new management agreement. That came in mid-2012. Since then, though, the firm has searched for a way to cash out Aster's estate, which accounted for the largest ownership stake in the firm.

The deal will have a profound impact on how the Meridian funds will be run. Meade and Schaub will take over Meridian Growth, which had been led by Richard Aster for 18 years before his death. The fund's strategy of buying small- and mid-cap stocks that can grow earnings at least 15% a year will be replaced by the process that Meade and Schaub used at Janus Triton and Janus Venture, which stressed competitive advantages, consistent cash flow growth, and attractive valuations. Their process often led to distinct sector weightings versus an index and peers. Meridian Value and Meridian Equity Income will remain in the hands of the managers at Aster Investment Management, with England remaining as the lead on both. William Tao, a current comanager on Meridian Growth, will remain in that capacity. The funds' respective strategies won't change.

The deal should calm a lot of concerns about the Meridian funds. Even though Meridian Growth's strategy will change somewhat, it is now in the hands of two capable managers, which could give it a needed shot in the arm. It also means England can go back to concentrating on Meridian Value, a fund he has helped run the past 12 years. More important, a sale of the firm may give shareholders confidence the funds are on solid footing. Indeed, more than $800 million had exited the Meridian funds over the past year. Corkins and team will now have to convince shareholders to reverse that trend.

Vanguard Launches International-Bond Fund
On Friday, May 31, Vanguard rolled out a passively managed, broad international-bond fund: Vanguard Total International Bond Index Fund (Admiral shares: (VTABX); Investor shares: (VTIBX)). 

Vanguard finally made good on its promise to roll out the fund, which tracks a broad, Barclays-managed index of investment-grade corporate and government debt issued in more than 50 countries. Vanguard launched the fund with Investor and Admiral share classes, costing 0.23% and 0.20%, respectively.

Then, on Tuesday, June 4, Vanguard launched an exchange-traded fund share class for the fund, Vanguard Total International Bond Index ETF (BNDX), which also costs 0.20%.

Out of the gate, the new fund devotes 22% of its assets to bonds from Japan, 11% to debt from France, 11% to bonds from Germany, 8% to debt from the United Kingdom, and 8% to bonds from Italy.

New Comanagers on FPA Crescent
Gold-rated  FPA Crescent (FPACX) has promoted two analysts to be longtime manager Steve Romick's comanagers. Brian Selmo and Mark Landecker, who have been with the fund's advisor since 2008 and 2009, respectively, and have served on this fund's investment committee, officially became portfolio managers on June 2, 2013. Increasingly in recent years, the duo have been comanagers in all but name, Romick said earlier this month. Romick has run the fund, which has the best 20-year record in the moderate-allocation category, since its 1993 inception. In recent years he's built a team of 10 investment professionals, including Selmo, Landecker, and himself, to handle the fund's nearly $12 billion asset base. Selmo and Romick have more than $1 million invested in the fund, while Landecker has between $500,000 and $1 million invested.

GSAM Mid- and Small-Cap Manager Departs
Earlier this week, Goldman Sachs Asset Management announced that longtime portfolio manager John Kelly Flynn has left the firm, effective June 3. A member of GSAM's U.S. value equity team since 2002, Flynn had comanaged Neutral-rated  Goldman Sachs Small Cap Value (GSSMX) until his departure.

As part of the transition, David Deuchler has rejoined GSAM's U.S. value equity team as a vice president. For the past seven years, Deuchler had been in the hedge fund industry, most recently working for Suvretta Capital. He will be responsible for research and portfolio management for the health-care sector for GSAM's mid- and small-cap value strategies.

Manager Changes on Buffalo Funds
Grant Sarris, comanager of the $3.3 billion, Bronze-rated  Buffalo Small Cap (BUFSX) as well as the smaller, Bronze-rated  Buffalo Mid Cap (BUFMX) and the even smaller, micro-cap-themed Buffalo Emerging Opportunities (BUFOX), resigned as of May 31 to spend more time with his family. He will not be replaced on Buffalo Small Cap and Buffalo Mid Cap, which still have three and two listed managers, respectively; one of these is Kent Gasaway, who will eventually drop his duties as comanager of Buffalo Growth (BUFGX) in order to devote more time to Buffalo Small Cap and Buffalo Mid Cap. Analyst Chris Carter will be promoted to comanager of the Growth fund in place of Gasaway, and analyst Craig Richard is being promoted to comanager of Buffalo Emerging Opportunities in place of Sarris.

Sarris had been with Buffalo fund advisor Kornitzer Capital Management for nearly a decade, and his experience will certainly be missed. However, he was only one of a dozen portfolio managers and analysts who collectively manage the seven Buffalo domestic-equity growth funds, and the shop's team approach means that Sarris' departure isn't as damaging a loss as it might have been. Buffalo Small Cap and Buffalo Mid Cap both have Morningstar Analyst Ratings of Bronze, and those ratings will not be changing for now.

Russell Swaps Multiple Layers of Managers
Philip Hoffman has taken the lead of Neutral-rated funds  Russell International Developed Markets (RINTX) and  Russell Global Equity (RGESX). His predecessor, Matthew Beardsley, will take a role as a senior client executive, working with institutional clients of the firm. Beardsley served a relatively short tenure as lead of the two strategies, having taken the helm in February 2012 and September 2009, respectively. Hoffman, who is based in Russell's London office, has been a portfolio manager since 2004 and currently is a listed manager on several foreign-domiciled funds, including Russell Global Opportunities.

Russell's multimanager funds are actively managed, and Hoffman has already made changes to the two funds' subadvisor lineups. For Russell Global Equity, he's removed T. Rowe Price and GLG and added Wellington. For Russell International Developed Markets, he's removed Mondrian and Axiom and added Barrow, Hanley, Mewhinney & Strauss and Numeric.

BlackRock Manager to Depart
Jean Rosenbaum, who comanaged  BlackRock US Opportunities (BMEAX) and BlackRock Science & Technology (BGSAX), respectively, since 2002 and 2000, will leave the firm at the end of June 2013. Ian Jamieson, who has been a member of BlackRock's Global Opportunities team for 10 years and who has managed a small- and mid-cap separate account for about six years, will become the lead manager on BlackRock US Opportunities. The still relatively new lead manager of Neutral-rated  BlackRock International Opportunities (BREAX), Nigel Hart, also will become a named manager on BlackRock US Opportunities.

Tony Kim also has joined BlackRock's Global Opportunities team from Artisan Partners, where he was a technology analyst for the Silver-rated  Artisan Global Opportunities (ARTRX). Kim will take Rosenbaum's spot on BlackRock Science & Technology with Erin Xie, who has comanaged the fund since 2005.

Tom Callan, the founder and leader of the Global Opportunities team, will remain a listed manager on both funds.

BlackRock's Global Opportunities team also hired Ruth Nagel from Wellington Management to cover financial stocks.

Matthews to Close Asia Dividend Fund
On May 30, Matthews announced that it will close Gold-rated  Matthews Asia Dividend (MAPIX) to most new investors on Friday, June 14. The firm will close both the Investor and Institutional share classes. Current shareholders will be able to make additional investments.

The firm attributed the closure to the fund's size--it has $5.4 billion in assets--and strong inflows. As a result, the all-cap fund's managers had found it increasingly difficult to invest its assets in small- and mid-cap stocks. As such, they felt it prudent to slow the pace of inflows and protect the integrity of the fund's investment mandate to invest in stocks across all capitalization ranges, rather than simply shifting toward selecting larger-cap stocks only.

Morgan Stanley to Launch Global Quality Fund
Morgan Stanley plans to launch a new world-stock offering, Morgan Stanley Institutional Global Quality. The fund will be managed by the same team that runs Silver-rated  Morgan Stanley Institutional International Equity (MSIQX) and Silver-rated  Morgan Stanley Institutional Global Franchise (MSFAX). The team has generated solid risk-adjusted returns at both funds and places an emphasis on higher-quality fare in each portfolio--but more so at Morgan Stanley Institutional Global Franchise, which (unlike Morgan Stanley Institutional International Equity) invests exclusively in companies with dominant franchises and which is less valuation-sensitive. The new fund will clearly focus on higher-quality fare as well, but it is expected to land between its two siblings on that front. The expense ratios are capped by fee waivers at 1.2% for the I shares, 1.55% for the P shares, and 2.05% for the L shares.

Kalmar Nabs Ex-Brandywine Analyst
Kalmar Investments hired analyst James Gowen II to join the investment team supporting the firm's strategies, including Bronze-rated  Kalmar Growth-with-Value Small Cap . Gowen has 26 years of investment experience and will be the 10th member of Kalmar's research staff. Gowen most recently served as a team leader for the health-care and technology sectors at Friess Associates, advisor to the Neutral-rated  Brandywine (BRWIX) and  Brandywine Blue (BLUEX) funds. Gowen won't have to move far, as both Kalmar and Friess have their investment operations headquartered in Delaware.

Gowen's move fits a larger trend for Friess. In recent years, the firm has seen changes in its comanager ranks and multiple analyst departures while fund performance suffered. Both Brandywine's and Brandywine Blue's performance fell to the 99th percentile of their respective categories during the trailing five years through June 5, 2013.

Nebraskan College Savers Get a Bigger Tax Break
Nebraska's governor, Dave Heineman, signed a law on Tuesday increasing the state tax deduction limits for college savers, a boon for investors in one of the state's four 529 college-savings plans. Nebraska residents will now be able to deduct $10,000 for a single person or a married couple filing jointly (or $5,000 if married as a single filer), double the previous cap. The three Nebraska plans currently covered by Morningstar analysts each receive a Neutral rating, indicating that, while not necessarily stand-out options, they are serviceable choices for in-state residents and may be the best choice given the now even more attractive in-state tax benefits.

Associate director of fund analysis Daniel Culloton, senior fund analysts Greg Carlson and David Kathman, and fund analysts Robert Goldsborough, Shannon Kirwin, Flynn Murphy, Kathryn Spica, and Rob Wherry contributed to this report.