Plus, another new global fund, manager changes, fines, and more.
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By Andrew Gunter | 05-01-08 | 11:53 AM | Email Article

 Allianz NFJ Small-Cap Value  and  Allianz NFJ Dividend Value  reopened this week. The funds have been in net redemptions recently as investors became jittery about equities. Redemptions at the small-cap fund come despite its strong performance versus small-value peers. Through late April 2008, the fund's year-to-date 1.3% return topped 95% of rivals, yet the managers had to trim positions unwillingly to raise cash, which can generate taxable distributions. We think the reopening is an opportunity for those seeking a small-cap fund for the long haul. Allianz NFJ Dividend Value also presents an opportunity. The large-value fund has reasonable expenses, experienced managers, and a proven strategy. We expect subadvisor NFJ to close both funds again when asset flows stabilize to increase their odds of continued success.

Andrew Gunter is a fund analyst with Morningstar.

Fine on American Funds Distributors Stands
The Financial Industry Regulatory Authority has upheld a $5 million fine levied in 2006 on American Funds Distributors for directed-brokerage agreements dating from 2001 through 2003. Directed-brokerage means American Funds and its AFD sales force channeled mutual fund trading business and brokerage commissions to securities firms who also sold a lot of American Funds. This is a violation of FINRA's Anti-Reciprocal Rules, which seek to curb conflicts of interest that might ultimately harm investors. According to FINRA's press release, its adjudicatory body reaffirmed that AFD "deliberately formed directed brokerage arrangements" with the top sellers of its funds, and then told the investment advisor (the firm that manages American Funds--Capital Research & Management) the amount of commission business each firm should receive. Importantly, while the fine still stands, the FINRA committee noted that it found no evidence of harm to American Funds shareholders. For more on American Funds, check out our American Funds Fund Family Report.

MainStay-ICAP Joins the Global Fund Fray
MainStay Investments and subadvisor Institutional Capital, in which MainStay is a shareholder, will launch a new fund: MainStay ICAP Global. Available today, the fund seeks to outperform the return of the MSCI World Index. Initial filings indicate it will own between 50 and 80 stocks, many of which the firm already owns in Analyst Picks  MainStay ICAP Select Equity , a large-value fund, and  MainStay ICAP International Equity , a foreign large-value fund. Tom Wenzel and Jerry Senser, who manage Select Equity and International Equity, will run the new fund.

This fund follows a trend. In recent months, Dodge & Cox, Vanguard, Wasatch, and others have announced plans for, or launched, global funds. For insight on what to look for in such a vehicle, check out this recent article.

BlackRock Plans Large-Cap Index Fund
BlackRock plans to offer an S&P 500 index fund, according to regulatory filings. BlackRock Index Equity's cheapest share class, its institutional shares, may not be easily available to individuals who don't use an advisor. The minimum investment in these shares, which will charge a reasonable 0.15%, is $2 million. Registered Investment Advisors may access institutional shares for their clients with a minimum investment of $250,000. Otherwise, A shares of the fund will charge 0.36% along with a 3.0% front-end load.

Legg Mason Partners Fund Gets New Comanager
Derek Deutsch has replaced Brian Posner, the departing executive of subadvisor Clearbridge Advisors, as comanager at  Legg Mason Partners Capital . Deutsch has been in the business for nearly 10 years. He joins comanager Brian Angerame, a manager of the fund since mid-2006. So far, the go-anywhere Legg Mason Partners Capital has failed to set itself apart versus either mid-blend or large-blend competitors. This management change doesn't help its case.

Fidelity Introduces New Managers to Several Select Funds
Four sector- or industry-focused Fidelity funds get new managers today. The first is Brian Wilhelm, who takes over for Stephen Hermsdorf at  Fidelity Select Insurance . This may be another step in Fidelity's ongoing effort to place experienced sector analysts at the helm of Select portfolios. Wilhelm arrived in 2006 from research firm Dowling & Partners, where he covered insurers for 10 years.

Two other Select funds may be getting their managers for a limited time. The firm often rotates promising analysts among sector funds before giving diversified funds to run. At Fidelity Select Defense & Aerospace , Maurice FitzMaurice takes over for Andrew Hatem. FitzMaurice will continue to manage other industry funds focused on air- and ground-transport equities. He's a Fidelity veteran of about 10 years. Also, Jonathan Kasen, who joined Fidelity in 2006, succeeds Vincent Montemaggiore at Fidelity Select Industrial Equipment . Finally, at Fidelity Select Paper & Forest Products , comanager Justin Bennett steps down, leaving comanager John Sheehy with sole management responsibilities. For more on Fidelity, check out our Fidelity Fund Family Report.

 

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Andrew Gunter does not own shares in any of the securities mentioned above. Find out about Morningstar's editorial policies.
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