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Fund Times

Fund Times: Big Fund Firms Get Bigger

Plus, news on Columbia, Torray, Merger, and more.

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In what comes as no surprise, the largest fund families continued to grow and attract significant assets through November 2005, according to data from the Financial Research Corporation (FRC). The total assets under management increased by an average of 15% for the top 25 largest fund families. For example, 13 of the top 25 firms enjoyed double-digit growth between 2004 and 2005. The news was even cheerier at ETF provider Barclays, who captured a 56% year-over-year increase, bringing them to a total of $166 billion assets under management. Of course the top three by size continue to add significant stakes to their kingdoms. Vanguard only added 15% but still ends up being the largest money manager at $787 billion; American, which gained 23%, brings its total to $757 billion (just three of their funds represents 36% of that total number); and finally Fidelity rounds out the top three with $726 billion under management with an 18% increase.

Interestingly, only six firms of the 25 largest bled assets over the past year.

Managers to Depart at Columbia
 Columbia International Stock (CISAX) will lose two of its three managers. Penelope Burgess and Deborah Snee, who have worked on the fund since July 2004, will no longer comanage the fund effective Jan. 6, 2006. This change comes just two months after Frederick Copper was brought in as lead manager. Copper first joined Columbia in September 2005. Prior to that, he worked for Putnam Investments and before that for Wellington Management Company, LLP. Copper ran domestic small-cap value funds at Putnam, but he has no public record managing international funds.

Snee and Burgess will also leave Columbia Greater China (NGCAX) on Jan. 6, 2006, leaving Copper and Jasmine Huang as the remaining managers on that fund.

Torray vs. Torray
 Torray Institutional (TORRX) lost a big fund shareholder. One of the fund's larger shareholders (who held about two thirds of the fund's total assets) pulled his stake out of the fund--taking it from more than $1.2 billion to about $400 million. That has caused Torray Institutional to lag its retail version sibling,  Torray Fund  (TORYX), by 100 basis points for the year-to-date period through Dec. 27, 2005, despite having an expense advantage. The effect was due in part to trading costs, but owed primarily to the accumulation of cash in an up market while the managers unloaded positions to meet the redemption.

What a Fitting Name for a New Firm
Geronimo Partners Asset Management, LLC is coming out with new "absolute return" vehicles and forming a new fund company in the process, The Geronimo Funds. It will offer three different options, all purporting to be hedgelike vehicles. However all have the relatively modest goal of beating the Merrill Lynch 3-Month US T-Bill Index: 3% for back-load C shares, 2% for front-load A shares, and a maximum performance adjustment of 1.25% in either direction, meaning it could go from 1.75% to 4.25% for the C Shares and 0.75% to 3.25% for A shares. According to SEC filings, the firm appears to have $250 million of assets under management, mostly in hedge funds.

If There's No Merger, Merger Fund to Feel Pain
 Merger Fund (MERFX) has a lot riding on the line with  Guidant (GDT). Its management team is betting that beleaguered Guidant will still be an attractive acquisition target. Almost 5% of the fund's total net assets are dedicated to that one stock.

Guidant's merger with  Johnson & Johnson (JNJ) has been in doubt since the firm revealed potential life-threatening wiring and battery defects on many of its implantable cardioverter defibrillators (ICDs).

Other top Guidant owners, who may not have placed as much emphasis on the deal include  Fidelity Select Medical Equip/Systems (FSMEX),  RiverSource New Dimensions (INNDX),  Vanguard Capital Opportunity (VHCOX), and  Jennison Health Sciences (PHLAX).

Dieter Bardy does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.