Fund Times: New Fund Seeks Gains Via Corporate Change

A proposed fund from a new, small New York firm says it will devote all of its energies and investments to corporate activism. The ABC Fund will invest in companies with suspect  governance and try to push them on the right path before they become the next Enron  or  WorldCom , according to a prospectus filed this week.

The fund's advisor, H Team Capital, proclaims it will be "on the lookout for companies where management or the company's board is not doing right by shareholders and to go in to those companies and try to change things for the better." It will attempt to accomplish this by talking to management, agitating for new leadership or board members, mounting proxy fights, or encouraging takeovers.

That sounds noble, but activist investing requires a great deal of expertise and tenacity. It can take a long time and a lot of resources to persuade or force a company to change its ways, and it can take an even longer time for the market to acknowledge the improvements if the efforts are successful.

Furthermore the fund's manager, Howard Horowitz, a lawyer and former merger-arbitrage analyst for the now defunct Lipper & Co. investment firm, has no public record as a solo mutual fund manager. Investors should stay wary of the fund until it proves it's a serious corporate avenger and not a clever attempt to exploit the public's preoccupation with corporate malfeasance. (Prospective shareholders will also want to keep in mind that the fund will have to gather sizable assets if it's to have meaningful pull with companies.)

Laggard Value Fund Gets New Manager
 First American Large Cap Value  has a new lead manager.

Matthew Finn has joined First American from St. Paul, Minn.-based Advantus Capital Management and replaces Brent Mellum as the head of the fund's management team. Mellum, who has lead the fund to three below-category-average finishes in his five years as lead manager, will continue working on the fund.

Finn has put up respectable numbers at a couple of different firms, and he actually served two stints at Advantus. He worked at the firm from 1994 to 1998. Then he left to become the leader of Boston-based Evergreen Investment's growth and income group and to manage its  Evergreen Value Fund  until 2001, when he rejoined Advantus as head of equities and comanager of Advantus Cornerstone  and Advantus Spectrum .

First American Large Cap Value has been a perennial laggard. Its 10-year annualized return of 8% through the end of May trails both the large-cap-value average and the Russell 1000 Value Index. A management change probably couldn't hurt.

Eaton Vance Buys Tax-Managed-Investing Firm
Boston-based  Eaton Vance  has  bought a majority stake in tax-managed-investing experts Parametric Portfolio Associates.

Eaton Vance, which has successful tax-managed mutual funds of its own, such as  Eaton Vance Tax Managed Growth 1.1 (ETTGX), paid $28 million in cash for 80% of the Seattle-based Parametric. Parametric's executives and investors will retain the remaining 20% of the company at least until 2006, when they will have the option of selling the rest of their shares to Eaton Vance.

Parametric subadvises a couple of mutual funds, including  PIMCO PPA Tax-Efficient Structured Emerging Markets (PEFIX), but most of the 16-year-old firm's $4.7 billion in assets under management is in separate accounts.

Seligman to Offer Real Estate Fund
J. & W. Seligman & Co. plans to offer the Seligman LaSalle Real Estate Fund, according to an SEC filing. It will invest in real estate investment trusts and other real estate-related equities, the filing said. Keith Pauley and Stan Kraska of LaSalle Investment Management of Baltimore, an institutional real estate investment firm with more than $20 billion in assets, will run the fund. Real estate funds on average have been the best performing domestic stock fund category of the last three years.

ING Taps Wellington for Large-Cap Fund
ING Funds has hired Wellington Management Company to subadvise its ING Large Cap Growth Fund (NLCAX). Wellington's Andrew J. Shilling, who has a short track record as a solo mutual fund manager, will run the fund. He has managed  Hartford Growth  for a little more than two years, but has limited the fund's losses during his tenure.

ING Large Cap Growth needed help. It finished in the bottom tenth of the large-growth category and surrendered more than a third of its value in each of the last two years.

Hartford Closes Fund
 Hartford Midcap (HFMCX), which has about $1.6 billion in assets, will close to new investors on July 31. The fund's five-year trailing gain of more than 15% beats 98% of its peers.