American Funds' parent Capital Group Companies
will continue to reduce its staff in the coming weeks. The firm has already eliminated 60 support staffers in its Global Institutional Group in Europe, divided between the London and Geneva offices. The GIG investment management team has not been affected. Capital Group spokesman Chuck Freadhoff says that "as assets under management have declined, the support structure that you build for a larger asset base is no longer needed." He said shareholders of the American Funds, which operate in a separate division of Capital Group, will not be affected.
recently announced its second round of layoffs. It is planning to cut roughly 1,400 jobs in the first three months of 2009, which will bring the total number to 3,000, or roughly 7% of its work force. The firm has suffered in the last year, as its equity offerings, including flagship Fidelity Magellan
, have shrunk in size due to steep losses and record-high shareholder redemptions. Fidelity's fixed-income side has struggled, too. A number of its short-term bond funds were caught owning subprime-backed bonds. Fidelity has yet to disclose if this latest round of layoffs will affect its investment staff.
Fidelity's Boston neighbor, Putnam Investments
, announced on Monday that it is cutting 47 jobs, including 12 portfolio-management positions. These departures have less to do with cost-cutting than with revamping its struggling equity lineup, though. Previously, almost every equity fund at Putnam was team-managed with quantitative and fundamental managers aboard. New CEO Bob Reynolds says he wants to move to a single-manager format so that there's "individual accountability and responsibility of the funds." He also wants to shift the emphasis away from quantitative research and toward fundamental analysis, which is why almost all the fund managers let go had quant backgrounds.
Putnam departures include Jeanne Mockard and Geoffrey Kelley of George Putnam Fund of Boston
; Michael Abata of Putnam New Value
and Putnam Classic Equity
; James Wiess of Putnam Investors
, Putnam Tax Smart Equity
, and Putnam Capital Appreciation
; Bradford Greenleaf of Putnam Global Equity
; Michael Scafati of Putnam International Equity
; John Ferry of Putnam Capital Opportunities
and Putnam International Capital Opportunities
; Kevin Divney and Brian DeChristopher of Putnam Vista
and Putnam New Opportunities
; Rick Weed of Putnam Small Cap Growth
, Putnam Discovery Growth
, and Putnam OTC & Emerging Growth
; David King of Putnam Convertible Income-Growth
and Putnam New Value
Putnam also plans to roll the following six funds into larger, cheaper siblings with similar investment styles in the next 30 to 60 days (shareholder approval wasn't required): Putnam Classic Equity will merge into Putnam Fund for Growth & Income
; Putnam Discovery Growth into Putnam New Opportunities; Putnam New Value into Putnam Equity Income; Putnam OTC & Emerging Growth into Putnam Vista; and Putnam Capital Appreciation and Putnam Tax Smart Equity into Putnam Investors. The acquiring funds' fundamental managers will stay put.
The changes remove some redundancies in Putnam's domestic-equity lineup. The family, however, has announced other, more troubling plans since Reynold came aboard in July 2008. It has filed plans with the SEC to launch a number of trendy offerings, including global sector funds, absolute return funds, and an emerging-markets stock fund. Given the high turnover in Putnam's manager and analyst ranks, these funds are unattractive. For example, David Hilder, who will lead the new Putnam Global Financial
, has been with the firm for less than a year and has no previous experience running mutual fund assets.
Curtain to Close on Liberty Ridge Capital, Weiss Peck & Greer, and Goldman Sachs Funds
Liberty Ridge Capital's (the former PBHG Funds that was implicated in the mutual fund trading scandals earlier this decade) days may be numbered. Old Mutual is seeking shareholder approval to merge two of the four funds subadvised by Liberty Ridge Capital, Old Mutual Mid Cap
and Old Mutual Small Cap
, into TS&W-subadvised offerings, Old Mutual TS&W Mid-Cap Value and Old Mutual TS&W Small Cap Value . Old mutual also plans to merge Old Mutual Select Growth
into Old Mutual Large Cap Growth , which are run by the same subadvisors, and Old Mutual Developing Growth
into Old Mutual Strategic Small Company . A special shareholders meeting will be held on Feb. 27, 2009. If approved, the merges will take place on or around March 6, 2009.
Additionally, Old Mutual will terminate Liberty Ridge Capital's subadvisory contracts for Old Mutual Strategic Small Company and Old Mutual Focused on Mar. 31, 2009. Ashfield Capital Partners will replace the Liberty Ridge on Strategic Small Company and join existing subadvisors Eagle Asset Management and Copper Rock Capital Partners. The firm is still looking for a replacement subadvisor for the Focused offering.
Pending shareholder approval, Robeco WPG 130/30 Large Cap Core
will merge into its more successful sibling Robeco Boston Partners Long/Short Equity
, which is run by managers Mark Donovan and Robert Jones and set to reopen on Nov. 24. The Robeco Weiss Peck & Greer investment team has run its 130/30 offering using quantitative models and the Robeco Boston Partners division has mixed quantitative screening and fundamental research. Robeco has yet to announce the fee impact on existing shareholders. The lackluster Robeco WPG offering charged 1.40%. While we like the Robeco Boston Partners fund's process and team, its 2.75% expense ratio is high. A special shareholders meeting will be held on Feb. 18, 2009. If approved, the merge will take place on or around Feb. 27, 2009.
Two more municipal-bond funds have bitten the dust. Goldman Sachs California AMT-Free Muni Bond
and Goldman Sachs New York AMT-Free Muni Bond
recently stopped accepting assets. Both funds will be liquidated on or about Dec. 29, 2008.
Capital Gains Distribution Announcements
A number of fund companies have posted capital gains distribution estimates for their offerings.
Vanguard is estimating big capital gain payouts for Fund Analyst Pick Vanguard Precious Metals and Mining
($1.95 or 19.4% of its Nov. 19 NAV), Analyst Pick Vanguard Health Care
($8.03 or 8.2% of NAV), Vanguard International Growth
($0.90 or 7.9% of NAV), and closed large-growth Analyst Picks Vanguard Capital Opportunity
($2.03 or 10.3% of NAV) and Vanguard PRIMECAP
($3.64 or 8.4% of NAV). Vanguard has estimates posted
for its other offerings as well.
Shareholders of Oppenheimer Developing Markets
and Oppenheimer Global Opportunities
also will receive sizeable payouts. Developing Markets will make a distribution of $7.20 per share or 33.9% of its most recent NAV and Global Opportunities will pay out $2.74 or 17.2% of NAV. The bulk of the payouts will be long-term gains which are taxed at lower rates than short-term ones. Click here
for Oppenheimer's estimated distributions for its fund lineup.
Tweedy, Browne expects to distribute $2.13 or 15.3% of NAV for Tweedy, Browne Value
; $2.60 or 14.6% of NAV for Tweedy, Browne Global Value
; and $0.04 or 0.6% of NAV for Tweedy, Browne Worldwide High Yield Dividend Value