Fidelity to Create New Sector Fund Board, Advisor
Rabobank finally settles on a buyer for most of Robeco, Fidelity to close Fidelity Small Cap Value, Matthews Asia to launch 2 new funds, and Victory Capital gains independence.
Fidelity recently filed to create a new investment advisor, Fidelity SelectCo LLC, and to form a separate board of trustees to oversee its lineup of 64 actively managed sector-based Select funds. Both require approval from shareholders of the Select funds. Currently, the sector funds are overseen by the equity and high-income board of trustees, which has responsibility for an additional 170 diversified funds. It's not the first time Fidelity has created a separate board to oversee its broad lineup. In 2007, the firm separated the oversight of the equity and high-income funds from the investment-grade bond, money market, and asset-allocation funds. If approved, these changes will occur by August 2013. The sector funds' strategies, management teams, and fees aren't expected to be directly affected by the change.
The split hints at Fidelity's broader ambitions for its sector funds as it tries to catch up with competitors that have benefited from the tremendous asset growth of sector-based exchange-traded funds. Fidelity had held off on offering ETFs (other than its legacy Nasdaq ETF) but has filed for permission to launch both passive and actively managed equity and fixed-income ETFs.
ORIX Acquires Asset Management Firm Robeco
On Feb. 19, Japan-based ORIX Corporation (IX) announced that it acquired 90.01% of the equity in Robeco from Rabobank, Netherland's largest retail bank, for approximately $2.6 billion. Rabobank will retain a 9.99% equity share in Robeco, the firm's asset management arm, as part of a strategic alliance between Rabobank and ORIX. Rabobank began exploring the potential sale of Robeco in early 2012, and final bids from prospective buyers were due in September. ORIX has a long history in financial services but not a large presence in asset management, which likely made the firm a strong candidate as there were no conflicting businesses or overlaps with Robeco to consider after the acquisition. From the perspective of Robeco's asset-management subsidiaries, including mutual fund firm Harbor Capital Advisors--which has more than $66 billion in mutual fund assets--the transaction should have little impact. Robeco has remained hands-off as a parent company for the nearly 12 years that Harbor has been owned as an independent subsidiary; Harbor expects that to continue after the acquisition. The deal is expected to be completed within six months.
Fidelity Small Cap Value to Close to New Investors
Fidelity Small Cap Value (FCPVX) will close to new investors on March 1. The rate of inflows into the fund had picked up this year due to strong performance and the recently announced closing of lead manager Chuck Myers' other fund, Gold-rated Fidelity Small Cap Discovery (FSCRX). Fidelity Small Cap Value currently has $3.5 billion in assets, with Myers running another $4.9 billion in Small Cap Discovery, a small-blend fund that has some overlap with Small Cap Value. In January, Derek Janssen was added as a comanager on Small Cap Value, running a small portion of assets. It's encouraging that Fidelity has decided to close the fund at this point rather than expecting the addition of Janssen alone to stave off asset bloat.
Manager Shuffle at Fidelity Sector Funds
Christopher Lin stepped down as a manager of Fidelity Select Electronics (FSELX) on Feb. 15, after taking over portfolio management responsibilities for Fidelity Select Computers (FDCPX) on Jan. 31. Lin replaced previous manager Matthew Schuldt. Stephen Barwikowski is now the sole manager of Fidelity Select Electronics.
Matthews Asia Funds to Launch 2 New Funds
Matthews Asia Funds filed to launch Matthews Asia Focus and Matthews Emerging Asia in April 2013. Matthews Asia Focus will invest primarily in common and preferred stock of companies located in Asian countries other than Japan, while Matthews Emerging Asia will invest a substantial share of assets in "emerging Asian countries"--as defined in the new fund filing, this includes countries such as Bangladesh, Cambodia, and Mongolia. That list may change in the future. Kenneth Lowe, J. Michael Oh, and Sharat Shroff will manage Matthews Asia Focus, while Taizo Ishida and Robert Harvey will manage Matthews Emerging Asia.
Victory Capital Gains Independence From KeyCorp
Victory Capital Management and its broker-dealer affiliate Victory Capital Advisors announced on Feb. 21 that they have broken away from parent firm and retail bank chain KeyCorp (KEY) in a $246 million deal. Employees, along with private equity firm Crestview Partners, will own a significant amount of the new company, which manages $22 billion in assets, including $8 billion in retail mutual funds. The sale is expected to close in the third quarter of 2013.
The deal shouldn't have a profound impact on the Victory mutual fund family. Victory had been planning for such a deal the last year, moving into a new building and enhancing the fund's technology and operations infrastructure. All of the firm's leadership, chief investment officers, and portfolio managers remain in place. That said, a muni bond team and investment professionals overseeing some index offerings will remain at KeyCorp and subadvise the funds.
In Memoriam: Martin Zweig
On Feb. 18, hedge-fund manager, pioneering technician, and prolific newsletter-writer Martin E. Zweig died at age 70. Zweig, who ran Zweig-DiMenna Partners in New York, famously predicted a "vicious" stock-market crash on an episode of PBS' "Wall Street Week with Louis Rukeyser" that aired on Friday, Oct. 16, 1987. The following Monday, the Dow Jones Industrial Average plunged a record 23%. A technician, Zweig also developed a technical tool to track investor sentiment known as the put-call ratio, which compares bearish options to bullish options.
Senior fund analyst Katie Rushkewicz Reichart and fund analysts Michelle Canavan, Robert Goldsborough, Kailin Liu, and Rob Wherry 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.