DWS Drops Subadvisor Dreman From Domestic-Value Funds
MFS Global Total Return adds 2 comanagers, Wasatch lures a large-cap value manager from ING, Calamos launches a dividend fund and a mid-growth fund, and American Century announces 2 promotions.
DWS Investments is switching the management lineup behind DWS Mid Cap Value (MIDVX) and the slumping, Neutral-rated DWS Small Cap Value (KDSAX). In September, an in-house team led by Richard Glass will replace the Dreman Value Management team subadvising the funds. Glass spent the past three years running small- and mid-cap value and separate accounts at a firm he founded, Lockwell Investments. Prior to that, he worked at Morgan Stanley and managed Van Kampen Small Cap Value--now Invesco Small Cap Value (VSCAX)--from late 2001 through mid-2010. Under Glass, the fund outpaced the small-value category average and the Russell 2000 Index, losing less than both the category and the index during market declines.
Glass was named U.S. head of small- and mid-cap value equities for Deutsche Asset & Wealth Management on Aug. 5. He will be supported by two new hires: Richard Hanlon, who founded and managed Glenville Capital Management for the past six years, and Mary Schafer, who worked at Morgan Stanley and Lockwell Investments alongside Glass.
The management changes fit a growing trend of dropping subadvisors in favor of in-house management at DWS. In January 2013, DWS fired subadvisor (and former DWS manager) Oliver Kratz and his firm Global Thematic Partners from DWS Global Growth (SGQAX). In May, the firm cut ties with QS Investors--which subadvised 16 DWS funds--and assigned in-house managers to the funds.
Dreman remains a subadvisor to the $183 million DWS International Value (DNVAX), but losing subadvisor responsibilities for the DWS mid- and small-cap value funds is certainly a blow. Disastrous results in Dreman's large-cap strategy during the financial crisis caused DWS to cut Dreman as a subadvisor to DWS Dreman High Return Equity (now DWS Equity Dividend) (KDHAX) in 2009. Dreman suffered additional outflows that dropped the firm's assets under management from more than $20.0 billion in 2007 to less than $4 billion as of July 2013. The loss of the DWS mid- and small-cap mandates will cause Dreman's assets to fall further, to roughly $1.85 billion.
MFS Global Total Return Boosts Its Ranks
Pilar Gomez-Bravo and Robert Persons will join the management team at MFS Global Total Return (MFWTX). The $1.1 billion world-allocation fund maintains a relatively constant 60%/40% split between global stocks and global bonds, with separate teams managing the stock and bond sleeves.
Gomez-Bravo is new to MFS, joining the firm's London office as a portfolio manager and credit analyst in early 2013 from Imperial Capital. Prior to joining Imperial Capital in May 2012, she served relatively short stints as portfolio manager and head of research at Negentropy Capital and co-founded Marengo Asset Management. From June 2006 to May 2010, she served as head of European credit for Neuberger Berman. Persons has a longer tenure at MFS, having joined the firm in 2000. He has served as a fixed-income portfolio manager since 2005.
Wasatch Hires Portfolio Manager From ING
Wasatch announced that it has hired David R. Powers to manage the $1.2 billion Wasatch Large Cap Value (FMIEX), replacing lead manager Ralph Shive and comanager Michael Shinnick. Shive will stay on through Sept. 30, 2013, to help with the transition. Both Shive and Shinnick will remain at the firm and continue to lead Silver-rated Wasatch Long/Short (FMLSX). Wasatch acquired both funds, as well as Wasatch-1st Source Income (FMEQX), in December 2008 from Indiana bank 1st Source, retaining the same management team at each fund. Shive built a strong track record at the large-cap value fund prior to its acquisition, although since then through July 2013 the fund's 3.3% annualized return has slightly trailed the 3.5% of its typical peer.
Powers helped to deliver solid results as comanager of ING Large Cap Value (IEDAX). Between his December 2007 start date and May 2012, the fund's 2.4% annualized return was nearly 5 percentage points higher than its typical large-cap value peer, which lost 2.4% during the period. Powers also had a short stint at Eagle Asset Management, serving as comanager of Eagle Growth & Income (HRCVX) between June 2012 and July 2013 and worked at Federated Investors prior to joining ING.
Calamos Launches Dividend Fund, Mid-Growth Fund
Calamos has launched two funds: Calamos Dividend Growth (CADVX) and Calamos Mid Cap Growth (CMXAX). The dividend fund is managed by John Calamos Sr., Gary Black, Ariel Fromer, Jeff Miller, and Tammy Miller (the Millers are husband and wife). Meanwhile, Calamos Mid Cap Growth is run by the same team of nine comanagers that also manages Bronze-rated Calamos Growth (CVGRX) and a number of Calamos' other equity funds. The launch of a mid-cap strategy is likely due to the fact that Calamos Growth has increasingly migrated toward holding large-cap stocks in its portfolio. Fund Times wrote in May about the plans for these funds.
American Century Promotes 2 Analysts to Portfolio Manager
On Aug. 5, American Century promoted longtime research analysts Chris Krantz and Jeff Bourke to comanager roles on Bronze-rated American Century Select (TWCIX) and Bronze-rated American Century Ultra (TWCUX), respectively. Krantz joined American Century in 2006, while Bourke joined the firm in 2007. Both will retain their analytical responsibilities. The promotions were effective Aug. 1. Keith Lee and Michael Li remain as managers of both funds.
Victory Capital Sold to Employees, Private Equity Firm in $246 Million LBO
Victory Capital Management and its broker-dealer affiliate Victory Capital Advisors have officially broken away from parent firm and retail bank chain KeyCorp (KEY) in a $246 million deal.
On July 31, KeyCorp closed on its deal to sell Victory to the employees of Victory and private equity firm Crestview Partners. Victory manages more than $20 billion in assets, including about $8 billion in retail mutual funds.
As Fund Times reported in February, the deal shouldn't have a profound impact on the Victory mutual fund family. Victory had been planning for such a deal during the last year, moving into a new building and enhancing the fund's technology and operations infrastructure. All of the firm's leadership, chief investment officers, and portfolio managers remain in place. That said, a muni-bond team and investment professionals overseeing some index offerings will remain at KeyCorp and subadvise the funds.
BlackRock Cuts Fees for 3 Funds
BlackRock has lowered the fees on some of its equity funds, but they're still not cheap. The fund family lowered the expense caps on Neutral-rated BlackRock US Opportunities (BMEAX), Neutral-rated BlackRock International Opportunities (BREAX), and BlackRock Science & Technology Opportunities (BGSAX), according to an SEC filing. A BlackRock spokesman said the fund's board of trustees pushed to lower the caps to make the funds more competitive on costs. The funds' post-reduction expense ratios, however, will be no better than average for their respective categories. The expense ratio of the front-load bearing A shares of US Opportunities, for example, will drop to 1.37% from 1.51%, which remains above the 1.31% median for mid-cap funds that charge front loads and above the 1.36% average for mid-cap growth funds regardless of share class.
Associate director of fund analysis Dan Culloton, senior fund analysts Greg Carlson and Gregg Wolper, and fund analysts Robert Goldsborough, Flynn Murphy, and Kathryn Spica contributed to this report.
Morningstar Fund Analysts does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.