Federal Court OKs Proposed TCW Sale
PIMCO granted patent for GDP-weighted global bond indexing scheme, Compass EMP rolls out 13 mutual funds, and American Century announces the liquidation of an S&P 500 Index fund.
Carlyle Group's (CG) planned acquisition of TCW Group from Societe Generale (GLE) will not be sidetracked by an arbitration case filed by a former TCW unit. The acquisition would place 60% of TCW in Carlyle hands and leave the other 40% of the firm's equity in the hands of management and employees. A TCW spin-off, EIG Global Energy Partners, had sought to block the sale.
After separating from TCW in December 2010, EIG retained its interest in a joint venture with TCW responsible for running a $4 billion energy investment fund. When the proposed TCW takeover was announced in August, EIG filed a suit to block the transaction. EIG's suit claims the acquisition could provide Carlyle--a competitor with rival energy funds--access to otherwise sensitive and proprietary information about EIG's portfolio of investments.
EIG's arbitration case remains outstanding. However, on Nov. 30, United States District Court Judge Christina Snyder in Los Angeles issued a ruling allowing the sale of TCW to Carlyle to proceed. TCW and EIG's joint venture fund will be placed into a trust until EIG's arbitration claims are settled.
Back in August, Fund Times wrote about Carlyle's effort to acquire control of TCW.
PIMCO Granted Patent for Global Bond Index Weighting Scheme
On Dec. 4, PIMCO announced that the U.S. Patent and Trademark Office has granted the firm a patent for the methodology behind the firm's Global Advantage Bond Index. The global bond index's weighting scheme bases portfolio weights on countries' gross domestic products. This method offers exposure to the ongoing shift in global bond markets from developed countries to emerging-markets nations. The idea is a fund tracking a GDP-weighted index will gain earlier exposure to markets that currently are underrepresented in more traditional, market-cap-weighted benchmarks.
The concept of GDP-weighted indexes has been around for quite some time, but indexes structured in such a manner are much newer. It remains to be seen whether other firms seeking to offer products based on such a structure would need to pay licensing fees to PIMCO or whether they could structure them sufficiently differently that a court would not judge them to have violated PIMCO's patent.
Compass EMP Funds Launches 13 Mutual Funds
Recently, Compass EMP Funds significantly broadened its suite of alternative mutual funds, rolling out 13 new passively managed funds. Eight of the funds track Dow Jones indexes that weight holdings by volatility or standard deviation instead of by market cap. Equally weighted indexes that weight holdings based on their volatility are a relatively new concept in the U.S., differentiating Compass' funds. The new volatility-weighted funds cover different corners of the equity market, including U.S. large-cap stocks, U.S. small-cap stocks, international equities, and emerging-markets stocks. The firm also launched three volatility-weighted, alternative long/cash mutual funds, a volatility-weighted commodity fund, three long/short funds, and two fixed-income funds.
American Century's S&P 500 Index Fund Bites the Dust
American Century will liquidate American Century Equity Index (ACIVX) in March 2013. The fund, which had more than $1.1 billion in assets under management as of May 2007, has seen consistent outflows in recent years, with assets dwindling to less than $250 million in October. For current shareholders, the good news is that cheaper index options abound. The American Century fund's 0.49% expense ratio was lower than many actively managed large-cap blend peers', but it stood out as expensive in the highly competitive world of S&P 500 index funds. For a comparable minimum $10,000 investment, investors can purchase competing offerings like Fidelity Spartan 500 Index (FUSEX) and Vanguard 500 Index Admiral (VFIAX), which carry cheaper expense ratios of 0.10% and 0.05%, respectively.
BBH Core Select (BBTEX) closed to new investors on Nov. 30.
JPMorgan (JPM) launched Total Emerging Markets (TMGGX), an emerging-markets allocation fund. The fund is managed by JPMorgan Emerging Markets Equity (JFAMX) comanager Richard Titherington and JPMorgan Emerging Markets Debt (JEDAX) comanagers Pierre-Yves Bareau and Matias Silvani.
Litman Gregory has fired Copper Rock Capital Partners and portfolio manager Tucker Walsh as a subadvisor of Litman Gregory Masters Smaller Companies (MSSFX). Frank Sustersic, the long-tenured manager of Turner Emerging Growth (TMCGX), will take over Copper Rock's sleeve of the multi-subadvised Litman Gregory fund.
Tryg Sarsland was named a comanager of Nuveen Global Infrastructure (FGIAX). The fund's other comanagers, Jay Rosenberg and John Wenker, will remain with the fund.
American Century Inflation Protection Bond (APOIX) has been renamed American Century Short Duration Inflation Protection Bond. The fund has operated as a short-duration offering since August 2011, when its benchmark changed to the Barclays U.S. 1-5 Year Treasury Inflation Protected Securities Index.
William Blair International Growth (WBIGX) will close to new investors, effective Dec. 31.
Lord Abbett has proposed merging Lord Abbett Stock Appreciation (LALCX) into Lord Abbett Growth Leaders (LGLAX). The change would first require approval by shareholders at a special meeting scheduled for March 2012.
Natixis Absolute Asia Dynamic Equity (DEFAX) will liquidate in December.
Effective Dec. 3, the members of the investment team responsible for the day-to-day management of RS Capital Appreciation (RCAPX) are Stephen J. Bishop, Melissa Chadwick-Dunn, and D. Scott Tracy.
Mutual fund analyst Flynn Murphy and ETF analyst Robert Goldsborough contributed to this report.
Morningstar Fund Analysts does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.