Course 502: Fund Warning Signs
Fund-Family Growth, Mergers, or Acquisitions
In this course
1 Introduction
2 Asset Growth
3 Manager Changes
4 Fund-Family Growth, Mergers, or Acquisitions
5 Keeping Watch

Why should it matter to your fund's performance if the sponsoring fund family decides that it wants to add some new funds to its lineup? Or that it wants to be sold or become independent? It may not seem like much, but those things can distract managers from doing their jobs. After all, if your employer is growing rapidly or is on an acquisition binge, doesn't that affect how you do your core job?

Once-great funds may also stall or lose their focus when their families expand and launch new offerings. Furthermore, funds can be forced to fill a different role as its family grows. Take Oakmark Fund (OAKMX). This one-time small-value fund is now firmly entrenched in mid- to large-cap territory. Initially, that upward shift was an intentional move by the fund's manager. However, as Oakmark expanded, it launched two dedicated small-cap funds, Oakmark Small Cap I (OAKSX) and Oakmark Small Cap II (OARSX). Now, even if current Oakmark manager Bill Nygren wanted to focus on small caps, it's unlikely that the fund would become all small again. The family already has funds that fill that role and the shop can't afford redundancy.

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