Dennis Lynch's team will take over Van Kampen American Franchise
. The large-value fund will likely have more of a growth orientation going forward because the incoming team currently runs several growth funds, but it will still focus on companies with strong competitive advantages. The fund will most closely resemble another Lynch fund, Van Kampen Core Growth , which is less than a year old.
Elmasry announced in February
that he was leaving to start his own firm, and the rest of his team, including Michael Allison, Paras Dodhia, Jayson Vowles, and John Kelly-Jones, later decided to follow him
. His departure is certainly a blow to the funds because he had amassed good records during his tenure, but it's encouraging that his replacements are well-established teams with solid track records of their own.
Wintergreen Battles Consolidated-Tomoka Land
Wintergreen Advisers, which runs Wintergreen Fund
, is in a heated proxy fight with one of its own portfolio holdings, Consolidated-Tomoka Land. At the heart of the matter is Wintergreen portfolio manager David Winters' disapproval of how the company is being run.
More specifically, Wintergreen has submitted several shareholder proposals, all of which will be voted on by shareholders on or before (by proxy) CTO's annual meeting, which will take place May 13, 2009. Most of the proposals center on the makeup of the board of directors, including Wintergreen Advisers' nomination of three independent directors (running against three incumbent directors) and the separation of the board chairman and chief executive officer positions.
Both Wintergreen Advisers and CTO have been forceful and vocal in their arguments. Each has sent shareholders additional proxy soliciting materials, which must be filed with the SEC, not only detailing the rationale for their own proposals but also picking apart the other's submissions. Not surprisingly, each has suggested that the other's intentions are self-serving and not in the interests of CTO's shareholders overall.
As a large shareholder in the firm--Wintergreen Advisers owns just more than 25% of CTO's shares--Winters certainly has the clout to command attention from CTO's board of directors and shareholders. He also has experience in shareholder activism; he spent most of his career working with Michael Price, a noted shareholder activist and investor, at Mutual Series.
Winters first bought CTO for the fund in 2006's first quarter and shortly thereafter began talking with management about his ideas and disappointments. The fund's CTO position peaked at nearly 8% of assets toward the end of that year. Currently less than 2.5% of assets, the investment is under water by more than 40%. Other mutual fund complexes that own a notable percentage of CTO's shares include Third Avenue (roughly 10%), Vanguard's index funds (around 3.5%), and Morgan Stanley (just more than 2.5%), according to year-end portfolios or SEC filings. Barclays Global Investors owns more than 5% of shares, though they are divided among accounts around the globe.
Mutual Series News
Mutual Series has announced manager changes to Mutual Beacon
. Mike Embler, who has been with Mutual Series for the past seven years, is leaving the firm May 1, 2009. Embler says that he is leaving for personal reasons and is not going to work in the investment business for the foreseeable future. Embler's departure is certainly a loss--particularly considering his experience in distressed investing, one of Mutual Series' specialties--but Mutual Series' funds have long been run collaboratively, so his impact was not as weighty as it might have been at another fund complex. With manager Mike Embler leaving the firm, Mandana Hormozi, previously an assistant portfolio manager on world-stock standout Mutual Discovery
, will join Christian Correa as an assistant portfolio manager on May 1.
Separately, the firm is launching Mutual International on May 1. The new fund will be managed by Philippe Brugere-Trelat, who has posted peer-beating returns during his three most recent years at Mutual European
(Brugere-Trelat also worked at Mutual Series for 10 years in the late 1980s and early 1990s), and Andrew Sleeman, who joined Mutual Series in 2007.
Finally, world-stock fund Mutual Qualified
will change its name to Mutual Quest to avoid any misperception that the fund has special tax considerations.
Evergreen Eliminates B Shares
Evergreen Investments, which is now part of Wells Fargo, is the latest fund family to cut B shares. Sales of B shares will stop June 30, 2009, though existing shareholders may continue to exchange their B shares for B shares of other Evergreen funds and add to their accounts through reinvestment of dividends.
B shares charge a back-end load, which is often waived if investors stay in the fund for a certain number of years. That allows the fund company to charge a higher expense ratio and make up money along the way. While that works to a fund company's advantage when assets rise during market spikes, it has the opposite effect during a market downturn and favors shareholders. The current market slump has potentially been an impetus for companies to eliminate B shares--American Funds
and AllianceBernstein made similar announcements recently--but it's been a growing industry trend for several years as allegations of broker abuse mounted. Franklin-Templeton
were among the first fund companies to cut B shares in 2005 and 2006, respectively. Read more about the differences between share classes here
More Manager Turnover at RS
RS Investment offices in San Francisco have seen some major reshuffling lately. The firm has had a number of managers either retire or leave over the past 18 months, including star manager Mani Govil
of RS Large Cap Alpha
. At least some of these personnel changes stem from management's decision to run the company's domestic-equity fund lineup with a team-managed approach rather than with solo or co-portfolio managers, as many of the funds have been structured previously.
Now comes news that two other managers are leaving the firm: John Seabern of RS Growth
and longtime manager Matthew Ziehl of RS Small Cap Core Equity
. Both funds will now be managed by the four-person RS Growth team, led by manager Allison Thacker, who currently manages RS Emerging Growth
, among other funds. The management changes are effective April 16 for Small Cap Core Equity and April 30 for Growth. In addition, Small Cap Core Equity will be closed to new investors effective immediately and will have a new name as well--Small Cap Equity.
The loss of Ziehl is the hardest to take because his fund has done quite well since he took over in 2002 and has weathered the current bear market better than most small-growth funds, including a few that Thacker leads.
With so many of the firm's longtime managers heading for the door, we'd think twice about investing with RS.
Schwab Tweaks Target-Date Lineup
The $500 million Schwab Target funds have undergone a few changes. The firm has lowered expense ratios to bring them more in line with industry standards. Schwab has also shifted the funds' asset-allocation strategy in response to investors' shrinking risk tolerances during market downturns. Funds intended for investors with longer time horizons will have a greater equity allocation. The fixed-income stake will increase at a more rapid pace starting 10 years before retirement.
Neuberger Berman's Looming Loads
Neuberger Berman is one step closer to becoming a load-focused shop. The firm announced in March
that it would stop selling no-load funds to new investors and recently said that the new load shares for five of its funds will launch June 1, 2009. On that date, the investor and trust share classes of Neuberger Berman Guardian
, Neuberger Berman Mid Cap Growth
, Neuberger Berman Small Cap Growth
, Neuberger Berman Socially Responsive
, and Neuberger Berman High Income Bond
will close to new investors.
Struggling fund Oppenheimer MidCap
will merge into its small-growth sibling, Oppenheimer Discovery
, pending shareholder approval. The stage was set back in November 2008 when former MidCap manager Richard Royce was demoted to analyst after just nine months on the job and Discovery manager Ron Zibelli took over. Zibelli has done a fine job during his three years at Discovery, and its expense ratio is 10 basis points lower than MidCap's, which will benefit shareholders.
Fidelity Nordic Names New Manager
After a mere four months at the helm, Fidelity has replaced Ronald Port at Fidelity Nordic
with Melissa Reilly. Although Reilly recently took over Fidelity Europe
and also runs other Europe-focused funds, it's unclear whether she has any special expertise in Nordic countries, unlike former longtime manager Trygve Toraasen, who left in 2008.
Fidelity tried to merge the narrowly focused fund into Fidelity Europe back in 2007
, but not enough shareholders approved the measure.
Associate director of fund analysis Bridget B. Hughes, CFA, and mutual fund analyst Ryan Leggio contributed to this report.