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Fund Times

Which Mutual Funds Hold Twitter?

T. Rowe Price to close New Horizons to most new investors, Vanguard's fixed-income group head to retire in March, Columbia Wanger's Chuck McQuaid to step down as CIO and Columbia Acorn comanager, and some tragic news at First Eagle.

With  Twitter  going public today, we thought it might be worth providing a list of U.S. open-end funds with exposure to Twitter. Except where noted, the portfolio dates are as of Sept. 30.

Both T. Rowe Price and Morgan Stanley became big holders of Twitter by investing in Twitter early on, in private fundraising. 

 T. Rowe Price New Horizons (PRNHX)--$112 million (0.82% weight)
 T. Rowe Price Growth Stock (PRGFX)--$111 million (0.30% weight)
T. Rowe Price Science & Tech (PRSCX)--$54 million (1.75% weight)
 Morgan Stanley Institutional Small Company Growth (MSSGX)--$37 million (2.16% weight), as of June 30
 T. Rowe Price New America Growth (PRWAX)--$9.9 million (0.24% weight)
ING T. Rowe Price Growth Equity (ITGIX)--$4.4 million (0.31% weight)
T. Rowe Price Global Technology (PRGTX)--$4.1 million (0.49% weight)
VALIC Company I Science & Technology (VCSTX)--$3.3 million (1.3% weight), as of Aug. 31
Optimum Large Cap Growth (OALGX)--$774,000 (0.08% weight)

T. Rowe Price to Slow Inflows at New Horizons
Bronze-rated  T. Rowe Price New Horizons (PRNHX) will close to new investors after the market's close on Dec. 31. The fund's category-topping performance over the trailing three and five years has attracted $1.5 billion of new money since January 2012. Inflows and market appreciation have pushed assets up to $14.3 billion as of October, making it the biggest actively managed small-cap fund. The fund, which is up nearly 40% for the year to date through Nov. 6, will likely get a big boost from today's Twitter IPO: The fund was an early investor when it was a private company.

Silver-rated $9.5 billion  T. Rowe Price Small-Cap Stock (OTCFX) and its $1.5 billion clone,  T. Rowe Price Institutional Small-Cap Stock (TRSSX), will also close to new investors after the market's close on Dec. 31, given strong inflows. Bronze-rated  T. Rowe Price Small-Cap Value (PRSVX), which has $9.4 billion in assets and has experienced net outflows in 2013, remains open.

Vanguard's Auwaerter to Retire
Vanguard's Bob Auwaerter has decided to retire from his post as the head of its fixed-income group after 32 years with the firm. He plans to step down in March 2014. His name isn't currently listed on any of Vanguard's bond funds, but Auwaerter, 58, has a long history of directly managing investor assets to good effect in earlier years, and he was instrumental in starting and building the firm's fixed-income group, according to CEO Bill McNabb. In Auwaerter's latest role of heading up the firm's fixed-income efforts, meanwhile, Vanguard notes that he has overseen nearly $750 billion in 70 different funds, across a broad swath of sectors, styles, and structures, including open-end, exchange-traded, and money market portfolios.

Vanguard's Gregory Davis is slated to take over Auwaerter's responsibilities, following what has turned out to be a relatively brief stint as the firm's CIO for the Asia Pacific region. Davis, 43, has overseen some $64 billion in that capacity but has also been responsible for $240 billion in assets managed by Vanguard's bond index group. Davis has been with Vanguard since 1999. 

Columbia Wanger CIO Stepping Back in 2014
In March 2014, Charles P. "Chuck" McQuaid is planning to step down as the president and chief investment officer of Chicago-based Columbia Wanger Asset Management. He will also relinquish his role as a comanager of the $21 billion, Bronze-rated  Columbia Acorn (LACAX), which he has managed since 1995. McQuaid, 60, will remain with the firm covering stocks (he's focused on the telecom sector in recent years). He will also continue to manage the $1.3 billion Columbia Thermostat (CTFAX), though one of Columbia Wanger's international analysts--Christopher Olsen--will join him as a comanager in January 2014. Olsen is a potential successor to lead Columbia Thermostat when McQuaid officially retires, though McQuaid hasn't mentioned a retirement date yet.

As part of the transition, the firm will split McQuaid's CIO title into two roles. Columbia Wanger's current director of domestic research, Rob Mohn, will be named domestic CIO. The firm's director of international research, Zach Egan, will be named international CIO and president.

Mohn will continue to manage Columbia Acorn and Bronze-rated  Columbia Acorn USA (LAUAX), though additional help is on its way. In January 2014, one of the firm's financials-sector analysts, David Frank, will be named comanager of Columbia Acorn. Also in January, one of the firm's energy analysts, Bill Doyle, will be named comanager of Columbia Acorn USA. Frank and Doyle have been analysts at Columbia Wanger since 2002 and 2006, respectively, giving them experience with the firm's steady-growth investment style.

First Eagle Portfolio Manager Dies 
On Nov. 4, 2013, First Eagle announced the death of portfolio manager Rachel Benepe at age 37. Benepe had been on a leave of absence from the $1.5 billion  First Eagle Gold (SGGDX). The firm also announced that comanager Matthew McLennan would assume full portfolio manager duties for the fund. McLennan was named a co-portfolio manager of the fund in March 2013 and has been with the firm since 2008, when he joined as co-portfolio manager of three of the firm's equity strategies: Silver-rated  First Eagle Global (SGENX), Silver-rated  First Eagle Overseas (SGOVX), and Silver-rated  First Eagle U.S. Value (FEVAX). McLennan and comanager Abhay Deshpande have earned positive People scores for First Eagle Overseas and First Eagle U.S. Value.

With McLennan at the helm, we do not expect big changes to the strategy of First Eagle Gold; however, his equity background both at First Eagle and previously at Goldman Sachs gives us some pause regarding his experience managing a commodities fund. We currently have placed our rating under review for First Eagle Gold.

DoubleLine Debuts Shiller Fund
Last week, DoubleLine launched a new open-end mutual fund with a big name and an equity twist.

The new fund, DoubleLine Shiller Enhanced CAPE (DSEEX), is something of a complicated hybrid. The fund brings together DoubleLine's active fixed-income management with an equity strategy that taps value investing principles developed by noted academic Robert Shiller, who devised the cyclically adjusted price/earnings ratio, also known as the CAPE ratio. CAPE is simply current price divided by the 10-year average of trailing earnings, adjusted for inflation. Its original idea came from the father of value investing, Benjamin Graham, so it is sometimes called the Graham-Dodd P/E and alternately is known as the Shiller P/E or the P/E 10. The theory behind CAPE is to smooth out the effects of the business cycle on earnings, providing a clearer view of the market's true earnings power. The measure has been shown to be a good predictor of long-term stock market returns and is the basis for many academic and practitioner stock market forecasting models.

The new fund seeks to exceed the returns of the Shiller Barclays CAPE US Sector Total Return Index by being 100% invested in debt instruments. However, some of those holdings will be pledged as collateral against derivatives that expose the fund to the U.S. stock market's four most undervalued equity sectors as measured by the CAPE ratio. As such, the fund aims to offer exposure both to the index and to debt securities.

The fund's managers are DoubleLine founder Jeffrey Gundlach and asset-allocation specialist Jeffrey Sherman.

This is the second time in the past 13 months that Shiller's name has been placed on a product in the broader fund industry. In October 2012, Barclays launched the Barclays ETN+ Shiller CAPE ETN (CAPE), an exchange-traded note that uses CAPE as its market-valuation measure. The ETN tracks the Shiller Barclays CAPE US Core Sector Index, which every month rotates its exposures to four of the nine S&P 500 Select Sector Indexes--the same ones that State Street's Select Sector SPDR exchange-traded funds track. A relative indicator decides which sectors to pick, tapping the five sectors that are most undervalued and then dropping the one with the lowest 12-month price return. The remaining four are equally weighted.

PIMCO New Subadvisor on Forward Credit Analysis Long/Short Fund
On Nov. 5, Forward Management announced that it has tapped PIMCO to replace Cedar Ridge Partners as the subadvisor of Forward Credit Analysis Long/Short .

Effective Nov. 13, PIMCO will subadvise the fund, which falls in the non-traditional-bond category. PIMCO's Joe Deane, who was named Morningstar's Fixed-Income Fund Manager of the Year in 1996, and David Hammer, who joined PIMCO last year from Morgan Stanley, will manage the fund. Although we don't currently cover this fund, we are struck by the fact that the fund's objectives are fairly opaque, given the fund's name and its nearly complete concentration in municipal bonds. We believe the average investor would expect this fund to be a corporate credit long/short portfolio. The fund currently is about 115% invested but mostly hedged with U.S. Treasury shorts and three short corporate issues. The fund is down about 13% for the year to date.

In a release, Forward officials noted that they have moved to significantly lower the fund's very expensive 2.14% expense ratio.

PIMCO also is the subadvisor for the $28 million Forward Investment Grade Fixed-Income .

Senior fund analysts Eric Jacobson and Katie Reichart and fund analysts Sumit Desai, Robert Goldsborough, and Flynn Murphy 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.