Fund Times: Wellington Woos Away Another Manager
Plus PIMCO shuttering funds, news on T. Rowe Price, and more.
Matthew Hudson will leave American Century Global Growth (TWGGX) for Wellington Asset Management. He will be the third manager to leave that fund this year; Henrik Strabo departed in February 2005 and Trevor Gurwich in August 2005 (although he's still with the firm). That's a disconcerting trend given that eight investment personnel have left American Century's international team this year, and only four of them have been replaced thus far.
This also adds to Wellington's success at hiring experienced managers away from other firms. Paul Marrkand of Putnam left for Wellington earlier this year, as did Peter Higgins, former skipper of Dreyfus Small Company Value (DSCVX) and Dreyfus Midcap Value (DMCVX).
Oakmark, Fidelity, and Templeton Win Battles with Corporate Management
Harris Associates, manager of Oakmark Funds, and Southeastern Asst Management of Longleaf Partners Fund (LLPFX) fame, won a big victory when they joined a group of shareholders that succeeded in persuading newspaper-publishing company Knight Ridder (KRI) to investigate strategic alternatives, including a possible sale of the firm. Harris has maintained that Knight Ridder's management has done a poor job for shareholders. Harris managed Oakmark Select (OAKLX) dedicates 2.68% of its assets to the stock, which represents about $260 million of the fund's total net assets.
Just how poorly Knight Ridder's management has done is evident in its stock price. As late as Oct. 31, 2005, Knight Ridder's stock was trading at $53.38, and according to Morningstar stock analyst James Walden, the company's fair value estimate is closer to $66 per share based on a conservative annual growth rate of 3.4%. Following the pressure from the large shareholders, the stock jumped to almost $63.
Fidelity and Templeton won a similar victory with the recent scrapped acquisition of IMS Health Care (RX) by VNU, the global information media company. At least 50% of the combined shareholders objected to the takeover, which Fidelity and Templeton had agitated against, making it unfeasible for management to proceed.
PIMCO Funds to Liquidate
PIMCO's board of trustees approved liquidating and disbanding three of their smaller funds because they have failed to attract sufficient assets. The funds in question include California Municipal Bond (PCAAX) with $18 million in assets, European Convertible (PECIX) with $66 million in assets, and Real Return Fund II (PIRRX) with $36 million in assets. Effective Dec. 1, 2005, the funds will no longer be available for purchase and will be liquidated on Dec. 30, 2005.
Good News for International Investors
We always like it when fund companies do the right thing and act as true stewards of their investors' money. To that end, T. Rowe Price Global Stock (PRGSX) is cutting expenses from 1.2% to a flat 1%, which compares very favorably with its typical no-load world-stock rival's 1.4% expense ratio. That's great news: It makes a fund we were already enthusiastic about, thanks to new manager Robert Gensler's arrival in April, even more appealing.
An Unnecessary Fund
SMI Advisory Services is opening the Sound Mind Investing Fund based on its newsletter, Sound Mind Investing. This fund of funds plans to utilize a "fund upgrading" strategy recommended by the newsletter to trade in up to 20 funds, crossing market cap and style barriers to find those funds exhibiting superior current performance. Although the fund is a no-load offering, it's still way too expensive with a 1.50% expense ratio on top of the expenses of the underlying funds. The almost certain high turnover rate, potential frequent capital gains distributions, and overall unattractive strategy make this fund one to avoid.
Dieter Bardy does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.