The 10 Biggest Manager Changes of 2015
Evaluating manager changes at funds from T. Rowe Price, Vanguard, and more.
Managers are crucially important to actively run funds, so whenever there is a change to a management team we take a close look to see what the impact will be. We evaluate the new manager’s resume and track record; we assess how important any remaining managers and analysts were to the fund’s past performance; and we determine whether there will be any modifications to the fund’s investment strategy.
Every manager change is different, though, so we don’t have any set rules for how we interpret them. While they often lead us to lower our Morningstar Analyst Rating, that’s not always the case. Sometimes we keep the fund at its current rating, and once every blue moon we even raise the rating.
Each month in Morningstar FundInvestor, I share brief takes on the most important manager changes, including the change dates and impacts. I've picked 10 of the biggest to be announced so far for 2015. I encourage you to click through to the full analysis to get the whole story.
Buffalo Small Cap (BUFSX) | Impact: Negative | Date: 07-20-2015
Kent Gasaway stepped down for health reasons, while comanagers Bob Male and Jamie Cuellar remain at the fund. Our take: Gasaway had been a leader at Buffalo, so his departure stings. In addition, he left while the fund is mired in a slump and nearly half its assets have gone out the door this year. The combination of these three factors led us to lower the fund’s rating to Neutral from Bronze.
Columbia Acorn (ACRNX), Columbia Acorn USA (AUSAX) | Impact: Negative | Date: 10-01-2015
Lead manager Rob Mohn stepped down from the fund on Oct. 1, 2015. Comanager David Frank remains on board, and Zach Egan and Fritz Kaegi were added as comanagers of Columbia Acorn in advance of Mohn’s departure. No managers were added to Columbia Acorn USA, where William Doyle serves as Mohn’s comanager. In addition, Acorn is moving to a more traditional portfolio manager/analyst division of labor in which analysts will no longer add stocks and choose their portfolio weighting. Our Take: Poor performance has spurred changes at these funds. We lowered Columbia Acorn’s rating to Neutral from Bronze in 2014 because of concerns about redemptions and poor performance. Columbia Acorn USA had been rated Bronze and is now rated Neutral.
Matthews Pacific Tiger (MAPTX) | Impact: Negative | Date: 09-09-2015
Comanager In-Bok Song left to work as an analyst at Thornburg. This follows Richard Gao’s departure in July 2015. Our Take: Although Song was not the lead, her departure along with Gao’s led us to lower the fund’s rating to Silver from Gold. As the rating implies, we still think the fund is in good hands. Sharat Shroff has experience and a track record at Matthews that inspires confidence. The fund recently reopened because of outflows seen at most Asia funds.
Perkins Mid Cap Value (JMCVX) | Impact: Negative | Date: 04-05-2015
Comanager Jeff Kautz resigned. Kevin Preloger, who was named comanager in April 2013, remains and was joined by Justin Tugman of Perkins Small Cap Value (JSCVX). Our Take: The fund has been trying to get back on track after several years of underwhelming performance. The fact that its five-year results aren’t up to par isn’t surprising or disappointing given the fund’s relatively conservative process, but weak stock-picking is more cause for concern. The loss of a long-tenured manager is disappointing but not insurmountable. Risk-adjusted results since inception remain strong. However, Kautz’s departure, coupled with the fund’s stock-picking woes, was enough to move this fund’s rating to Bronze from Silver.
T. Rowe Price International Stock (PRITX) | Impact: Negative | Date: 04-01-2015
Bob Smith stepped down, and Richard Clattenburg took his place. Clattenburg has been with T. Rowe Price since 2005, serving as an analyst and associate portfolio manager. Our Take: Clattenburg lacks a track record as a portfolio manager, so it’s a big drop from the seasoned Smith. We’ve lowered our rating to Neutral from Silver.
USAA International (USIFX) | Impact: Neutral | Date: 08-28-2015
USAA has hired Lazard Asset Management and Wellington Management and given them 15% each to manage. MFS managers Marcus Smith and Daniel Ling will still guide 70% of the fund. Our Take: Wellington and Lazard are solid managers. MFS has done such a good job that we’d rather not see them diluted, but they are still having quite an impact at 70%. We are maintaining our Bronze rating.
Vanguard Convertible Securities (VCVSX) | Impact: Negative | Date: 06-01-2015
Veteran manager Larry Keele stepped down and was replaced by Stuart Spangler. Our Take: Subadvisor Oaktree is an excellent firm, so we remain confident in the fund, but it’s still a blow to lose Keele, who has built a great record here. We lowered our rating to Bronze from Gold.
Vanguard Windsor II (VWNFX) | Impact: Negative | Date: 01-01-2016
Longtime lead manager James Barrow will step down at year-end. Comanagers Jeff Fahrenbruch and David Ganucheau will replace him. The two have been comanagers since 2013, and eight years ago Vanguard had said they would eventually succeed Barrow. (Barrow will continue to manage Vanguard Selected Value (VASVX).) Our Take: We knew Barrow would retire in the relatively near future, so this is not a surprise. Still, Barrow’s outstanding record makes it a real loss. His replacements are seasoned but do not have long track records of their own. We have lowered our rating to Bronze from Silver.
Wasatch Small Cap Growth (WAAEX) | Impact: Neutral | Date: 02-01-2016
Jeff Cardon will step down as lead portfolio manager of this fund and CEO of Wasatch Advisors. He will remain a comanager on the fund. J.B. Taylor will take over Cardon’s role as both CEO and lead manager on the fund at that time. Our Take: This looks like a gradual evolution. We are maintaining our Gold rating but will watch closely to see how involved Cardon is. On the plus side, Taylor has a strong record, too.
Weitz Value (WVALX) | Impact: Negative | Date: 12-31-2015
Wally Weitz is stepping down from management responsibilities at this fund. However, he will remain manager at Weitz Partners Value (WPVLX) and Weitz Hickory (WEHIX). Comanagers Brad Hinton and Dave Perkins will take over his responsibilities here. Our Take: Weitz’s departure from the fund is a loss, but he’s been working on the transition for years, and we feel good about Hinton and Perkins. We are maintaining our Silver rating.
Russel Kinnel has a position in the following securities mentioned above: VASVX, WAAEX, JMCVX. Find out about Morningstar’s editorial policies.