Author Archives: Editor

Driehaus International Small Cap Growth (DRIOX), November 2007

By Editor

[fa_archives]

November 1, 2007

FundAlarm Annex – Fund Report

Objective

The Driehaus International Small Cap Growth Fund seeks to maximize capital appreciation.  The Fund invests primarily in equity securities of smaller capitalization non-U.S. companies exhibiting strong growth characteristics. The fund invests at least 80% of its net assets in the equity securities of non-U.S. small capitalization companies, currently that is companies whose market capitalization is less than $2.5 billion at the time of investment.

Adviser

Driehaus Capital Management LLC, which was organized in 1982 to provide investment advice to high net worth individuals and institutions. As of July 31, 2007, it managed approximately $4.4 billion in assets. Driehaus runs three other mutual funds: Emerging Markets Growth (closed to new investors), International Discovery, and International Yield Opportunities (new in 2007).

Managers

Howard Schwab and David Mouser. Schwab is the lead manager here and was the lead manager for the Driehaus International Opportunities Fund, L.P., the predecessor limited partnership from its inception in August, 2002 until it transformed into this mutual fund. Schwab is also a co-manager of the Driehaus Emerging Markets Growth Fund and, for several months, helped manage the Driehaus International Equity Yield Fund. Mr. Mouser has “certain responsibilities” for investment decision-making on fund, “subject to Mr. Schwab’s approval,” just as he did with the limited partnership.

Management’s Stake in the Fund

Technically none, since the fund began operation after the date of the last SAI.

Opening date

September 17, 2007. If you don’t like that date, you could choose July 1, 2001 (the date on which Schwab began managing separate accounts using this strategy) or August 1, 2002 (the date that they launched the International Opportunities Fund, L.P., whose assets and strategies the mutual fund inherits). Technically you might also choose February 26, 2007, the date that the fund was “established as a series of Driehaus Mutual Funds” but apparently had no assets or investors. It’s a little confusing, but it does offer a certain richness of data.

Minimum investment

$10,000 for regular accounts, $2,000 for IRAs. The minimum subsequent investment for regular accounts is high, at $2,000, but it’s only $100 with an automatic investment plan. In any case, it’s a lot more affordable for most of us than the $20 million minimum required for a separate account that uses this same strategy.

Expense ratio

1.16% on assets of $205.8 million, as of July 2023. 

Comments

DRIOX represents an interesting case for investors. It’s a new fund but it’s directly derived from two predecessor entities. There are separately managed accounts with combined assets of $210 million and there was a Limited Partnership with assets of $100 million, both managed by the same guys with the same strategies. But they were also managed under very different legal structures (for example, the L.P.s don’t have to pay out distributions the way that funds are required to do) for very different sorts of clients (that is, folks with $20 million or more to invest). In addition, Driehaus runs two other mutual funds with different management teams but with the same investment discipline.

In general, all Driehaus managers are growth guys who look for companies which have:

  • Dominant products or market niches
  • Improved sales outlook or opportunities
  • Demonstrated sales and earnings growth
  • Cost restructuring programs which are expected to positively affect company earnings
  • Increased order backlogs, new product introductions, or industry developments which are expected to positively affect company earnings

They also consider macroeconomic and technical information in evaluating stocks and countries for investment.

What might we learn from all of that data? Driehaus makes gobs of money for its investors.

  • The International Small Cap Growth separate accounts have returned 36.9% annually since inception. Their benchmark has returned 13.5% over the same period.
  • The International Opportunities LP returned 36.75% annually since inception. Its benchmark returned 27.3% over the same period.
  • Emerging Markets Growth fund (DREGX) has returned 22.3% annually since inception. Its benchmark returned 13.6%. Over the past five years it has returned 44.2% annually, while its Morningstar peer group returned 36.7%.
  • International Discovery fund (DRIDX) has returned 22.2% annually since inception. Its benchmark returned 7.2%. Over the past five years it has returned 34.4% annually, while its Morningstar peer group returned 24.0%.

While I’m generally not impressed by big numbers, those are really big performance advantages, delivered through a variety of investment vehicles over a considerable set of time frames.

There are two risks which are especially relevant here. The first is that Driehaus is a very aggressive investor. Morningstar classifies Emerging Markets Growth and International Discovery as having Above Average risk. Both of the funds have turnover rates around 200%. That aggressiveness is reflected in considerable swings in performance. International Discovery, for example, has the following peer ranks:

Year Morningstar Peer Rank, Percentile
2003

22
2004

97
2005

1
2006

90
2007

1

Emerging Markets shows the same saw-tooth pattern, though in a tighter range:

Year Morningstar Peer Rank, Percentile
2002

66
2003

14
2004

48
2005

14
2006

4
2007

31

The performance data for the International Small Growth separate accounts makes the strategy’s strengths and limits pretty clear. They calculate “capture ratios,” which are essentially volatility estimates which measure performance in rising and falling markets separately. A score of 100 means you rise (or fall) in synch with the market. A score of 110 up and 130 down means that you rise 10% more than the market when it’s going up and fall 30% more when it’s going down. Here are the most recent capture ratios, as of 9/30/07:

 

3 Years

5 Years

Upside

179.28

179.66

Downside

139.51

110.01

Which is to say, it rises 80% more in good times and drops 40% more in bad than does the market. You don’t want to be here when the rain is falling.

The second risk is Driehaus’s penchant for closing and/or liquidating funds. Driehaus had a bunch of other funds that they seem to have liquidated: Driehaus International Growth (DRIGX), Driehaus European Opportunity (DREOX) and Driehaus Asia Pacific Growth (DRAGX), all of which died in 2003. The very successful Emerging Markets Growth fund just closed to new investors.

Bottom Line

For investors with $10,000 to spare and a high tolerance for risk, this might be as good as bet for sheer, pulse-pounding, gut-wrenching, adrenaline-pumping performance as you’re going to find.

Fund website

http://www.driehaus.com/DRIOX.php

 

Guinness Atkinson Alternative Energy (GAAEX), September 2007

By Editor

[fa_archives]

September 1, 2007

FundAlarm Annex – Fund Report

Objective

The fund seeks long-term capital appreciation by investing in US and overseas of companies involved in the alternative energy or energy technology sectors, which includes companies that increase energy efficiency but excludes nuclear.

Adviser

Guinness Atkinson Asset Management, headquartered in Woodland Hills CA but also has offices in London. The company was founded by a number of then and former managers for Investec, a multinational investment firm. The firm manages mutual funds whose net assets are about $340 million.

Manager

Tim Guinness, Ed Guinness and Matthew Page. Tim Guinness is the lead manager, the firm’s Chief Investment Officer and manager of the Global Energy and Global Innovators funds. Immediately prior to founding GA, he was joint chairman of Investec. Ed Guinness, Tim’s son, has engineering and management degrees from Cambridge. Before joining Guinness Atkinson, he worked on tech investing at HSBC and risk arbitrage for Tiedemann Investment Group in New York. Matthew Page has a Master’s degree in Physics from Oxford and worked briefly at Goldman Sachs before joining GA.

Opening date

March 31, 2006.

Minimum investment

$5000 for regular accounts, $2500 for regular accounts for individuals who own shares in other GA funds, $1000 for IRAs and $100 for accounts opened with an automatic investing plan.

Expense ratio

1.1% after waivers on $33.7 million in assets as of July 2023. 

Comments

More than is usually the case, I feel like I’m on a precipice over a gaping dark chasm of ignorance. There are two questions – is there a strong case now for alternative energy investing? and if so, is there a strong case for making that investment through an open-end mutual fund? Those are good questions for which good answers would take pages. Multiple, many, numerous pages. Little of which I’m competent to write. As a result, I’ll try to offer the second-grader’s version of the story and will ask the indulgence of folks who have profound professional knowledge of the subject.

Is there a case now for alternative energy investing? Well, there’s certainly a case for alternative energy so there’s likely a parallel case for investing in the field. What’s the case?

  • The world is running out of affordable oil and gas –

While there’s no question of imminent physical exhaustion, a number of economists project the future price of oil based on the notion of “peak oil.” At base, the peak oil theory says that once half of the oil in a particular reservoir is withdrawn, the price for removing the other half escalates sharply. There’s no single, definitive estimate for when a peak has been passed, since every oil field has its own life cycle. In general, though, experts seem to agree that the US peaked in the early 1970s and the North Sea peaked in the early 2000s. The most pessimistic estimates claim that global production is has already passed its peak (this is a subject, by the way, that causes Saudi oil ministers to sputter mightily), with 54 of the world’s 65 major producing nations in decline. A more cautious study commissioned by the US Department of Energy (Hirsch, et al, Peaking Of World Oil Production: Impacts, Mitigation, & Risk Management, 2005) predicted the peak would be “soon,” by which they meant within 20 years. Natural gas is not substantially better off.

That study made two other important claims: (1) “As peaking is approached, liquid fuel prices and price volatility will increase dramatically, and, without timely mitigation, the economic, social, and political costs will be unprecedented.” And (2) “Viable mitigation options exist on both the supply and demand sides, but to have substantial impact, they must be initiated more than a decade in advance of peaking.”

A point rarely recognized is that much of the oil that remains is not light sweet crude; it’s generally a heavy, sour oil that’s hard to refine and a relatively poor source of higher distillates such as gasoline.

  • Fossil fuel consumption is irreparably affecting the global climate

You don’t actually need to believe this argument, you mostly need to agree that it is moving into the area of “commonly accepted wisdom,” since that’s what motivates governments and other organizations to act.

I’ll note, in passing, that I’m not a climatologist and so I’m not competent to judge the technical merit of what appears to be an enormous and growing body of peer-reviewed research which substantiates this claim. I am, as it turns out, trained to assess arguments. From that perspective, I’m note that those arguing against the theory of human-induced climate change generally support their case through deceptive and misleading arguments – they mischaracterize their sources, suppress inconvenient conclusions found in the research they cite, over-claim their own qualifications, and shift argument grounds midway through. The vast majority of the skeptics’ discourse appears in blogs rather than in peer-reviewed journals and little of it is research per se but rather they focus on often-narrow methodological critiques (one recent controversial was over a quarter-degree difference in a calculation). With the possibility that the future of human civilization hangs in the balance, we deserve much more honest debate.

  • In anticipation of the two preceding arguments, governments are going to push hard for alternatives to fossil fuels

Whether through taxation, carbon emission caps, subsidies or legal protections (e.g., relaxed siting requirements), governments around the world are moving to support the production of alternative energy.

The tricky question is the “now” part – is it currently prudent to invest in this field? The Guinness Atkinson folks are refreshingly blunt, both in print and on the phone, about the undeniable risks in the field:

. . . a large percentage of alternative energy companies are thinly traded small cap stocks . . . many of these companies are loss making or just beginning to produce profits [and] many alternative energy stocks have appreciated significantly recently as a result of increased energy prices (Guinness Atkinson, The Alternative Energy Revolution, March 2006).

In a phone conversation, Jim Atkinson (GA’s president) stressed that these were voluntary caveats that GA included because they wanted well-informed investors who were willing to hold on through inevitable, short-term dislocations. The company does, indeed, support the goal of informed investors. Their monthly Alternative Energy Briefs provides a richness of information that I’ve rarely seen from a fund company.

Three factors specific to Guinness Atkinson cut against these concerns: (1) the elder Mr. Guinness has a lot of experience in the field of energy investing. The Alternative Energy fund is the offspring of a successful, offshore global energy fund of his. Both of the younger fund managers have graduate training in technical fields (engineering and physics) which bears on their ability to read and assess information about firms and their technologies. And (2) they’re reasonable conservative in their choice of companies. By Mr. Guinness’ calculation, about 82% of the portfolio companies have “positive earnings forecasts for 2007.” That number climbs to 90% by 2008. Finally (3) they build risk management into portfolio construction. They expect to have 30 or so stocks in the portfolio and, in a perfect world, they’d assign 1/30th of their assets to each stock. Lacking perfect confidence in all of their companies, they assign a full share only to companies in which they have the greatest confidence, a half share to those in which they have fair confidence and a “research share” – that is, a very small amount – to those whose prospects are most speculative but which they’d like to track. The managers note that their poorest performers are generally held in the “research” pool, which both vindicates their stock assessment and limits the damage.

Is there a strong case for making that investment through an open-end mutual fund? I’m rather more confident that the answer here is, yes. The alternative channel for alternative energy investing is one of about three exchange traded funds:

  • PowerShares WilderHill Clean Energy

(PBW) which invests in clean energy and conservation technologies. Its top holding is Echelon Corporation which provides “control networking technology for automation systems.” Echelon’s website highlights their work in improving McDonald’s kitchens. Net assets are $1.1 billion with expenses of 0.70%.

  • Market Vectors Global Alternatives

(GEX) which tracks the Ardour Global Index (Extra Liquid) of companies “engaged in the business of alternative energy.” Net assets are $61 million, expense ratio is not available.

  • First Trust NASDAQ Clean Edge US Liquid

(QCLN) tracks the NASDAQ Clean Edge U.S. Index of “clean energy” companies, which includes lots of semiconductor makers. The fund has $23 million in assets.

There are several “clean technology” ETFs, which invest in pollution control, networking, and efficiency-supporting companies. There are, in addition, a number of specialized “green” mutual funds (Spectra Green) and ETFs (Claymore/LGA Green) which don’t particularly focus on the energy sector. They like, for example, Starbuck’s because of its commitment to recycling and environmental causes.

So why not an ETF? At base, the only argument for them is low-cost: their expense ratios are about 0.7% and Guinness’ is about 1.7%. That cost advantage is overstated by three factors: (1) Guinness e.r. is declining, their’s isn’t. (2) Brokerage fees aren’t included – each purchase of an ETF goes through a broker for whose services you pay. And (3) ETFs don’t trade at their net asset value. When ETFs trade at a premium, you actually pay for less than you get. Premiums on the alternative energy ETFs have run lately from 33 to 260 basis points. By way of translation, a fund with a 70 basis point expense ratio and a 260 basis point premium to NAV is costing an investor 3.3% to buy.

The arguments against the ETFs are (1) that they’re limited to liquid investments. That’s why you’ll notice the “liquid” in the names of several. That generally excludes them from investing in private placements or very small companies. (2) You have to have a lot of confidence in the quality of the underlying index. A number of commentators don’t. Of PowerShares WilderHill Clean Energy, which has more assets than all of the other investment options combined, Morningstar recently opined:

. . . this fund lacks a well-reasoned strategy as well as a sensible, diversified benchmark. Instead, its index holds lots of companies with unproven business models and speculative stock prices. For example, the index’s average return on equity is actually negative, despite its rich average price/earnings multiple of 25 (Analyst Report, 3/5/07).

They concluded that investors “would be better off with an active manager,” though that was not a particular endorsement of Guinness Atkinson. In addition, (3) ETFs can be sold short and otherwise made part of the arbitrage games of hedge fund managers. Which isn’t a recipe for stable returns.

Perhaps as a result, Guinness Atkinson has consistently outperformed the ETFs. It benchmarks its performance against the WilderHill Clean Energy index. Here are the performance comparisons, as of 7/30/07:

  Guinness WilderHill
YTD 30.60% 25.01%
Trailing twelve months 34.35 22.39
Since fund inception 14.53 0.64

 

Bottom Line

If I were to invest in alternative energy, I think there’s a strong case to be made for investing with an active manager who has broad discretion and considerable experience. The ETF’s cost advantages are simply not sufficient to overcome their design limitations. Even if Guinness did not have a corner on the market for no-load alternative energy funds, their excellent work in a range of other funds, thoughtful portfolio construction and broad expertise makes them a strong candidate for the role.

(By way of full disclosure, my wife – who has degrees in environmental planning and law – reviewed a bunch of the literature I’ve been working through and chose to invest several thousand dollars of her retirement account in the Guinness Atkinson fund.)

Fund website

Alternative Energy Fund

Northern Active M International Equity (formerly Active M International Equity), (NMIEX), November 2006, July 2010

By Editor 

At the time of publication, this fund was named Northern Multi-Manager International Equity (NIEWX) Fund.
This fund was formerly named Active M International Equity.

[fa_archives]

November 1, 2006
Update (posted July 1, 2010)

FundAlarm Annex – Fund Report

Objective

The fund seeks long-term capital appreciation through a diversified portfolio of non-U.S. securities. Income is “incidental.” It’s willing to invest in companies of any size, though primarily in the developed markets. The portfolio is allocated among four independent, outside managers.

Adviser

Northern Trust. The parent company was founded in 1889 and has about $650 billion in assets under management. Northern Trust Global Advisors (NGTA) has been managing money for institutional investors for about a quarter century.

Manager

Andrew Smith, Senior Vice President and Chief Investment Officer for NTGA since 2000. Before that, he managed about a billion dollars in asset allocation funds for Spectrum Investments. Smith’s task here is primarily to select and monitor the fund’s sub-advisers. The four current sub-advisers are:

  • Altrinsic Global Advisors – A Connecticut-based firm with about $3 billion under management. They focus on large, high quality companies. Northern describes them as having a “relative value style: expected to protect capital in negative markets.”
  • Nicholas-Applegate Capital Management – A California-based adviser with about $15 billion under management. These folks provide an aggressive-growth element to the portfolio.
  • Oechsle International Advisors – A Boston firm which oversees about $18 billion. This is a fairly GARP-y, conservative growth group. Oechsle was subject to a disciplinary action by the SEC in 1998 for failing to adequately supervise one of its private portfolio managers, who has since left the firm. Oechsle subsequently reimbursed its clients for the monetary losses they suffered.
  • Tradewinds NWQ Global Investors – This is a wholly-owned subsidiary of Nuveen Investments with about $23 billion under management. These folks pursue an “absolute value” style which is “distinguished by deep specialization, fundamental analysis and transparency.” In theory they’ll provide the best down-side protection for the portfolio.

Inception

June 22, 2006.

Minimum investment

$2,500 for regular accounts, $500 for IRAs and $250 with an automatic investment plan.

Expense ratio

0.84%, after waivers from a 0.90% gross expense ratio, on assets of $475.1 million, as of July 2023. There’s also a 30-day, 2% redemption fee to discourage active traders.

Comments

The argument for Northern’s various multi-manager funds is pretty straightforward. Northern has been selecting investment managers for really rich people for 125 years. They’ve done it well enough that Northern has been entrusted with assets that are starting to creep up on the trillion dollar mark. They sorted through a set of 500 managers before selecting these four.

And, in general, they seem to be getting it right. Collectively Morningstar awards four-stars to Northern’s international fund line-up and praises their “very low” expense ratios. Nicholas-Applegate runs a bunch of pretty solid international funds, but their investment minimums are typically around a quarter million dollars. Tradewinds has only a few funds, but they’re solid, disciplined performers. Altrinsic and Oechsle’s public records are mostly with funds for sale to Canadian investors. In the US, they seem to serve mostly high net-worth individuals.

Northern positions this as a fairly aggressive choice. On their risk-reward spectrum, it occupies the fourth spot from the top behind the emerging markets, international real estate and international growth funds and next to their international index fund.

Bottom line

This fund is a calculated risk, in some ways more than most. You’re basically betting on Northern’s ability to assemble a group of superior investors whose services are not generally available. Mr. Smith has been doing this for better than 20 years and seems to be rising steadily within his profession. And Northern has been doing it, to the apparent satisfaction of “a well-heeled client” for better than a century. This seems to create a fair presumption in their favor, especially at a time when compelling choices in international funds are few.

Company link

http://www.northernfunds.com

November 1, 2006

Update (posted July 1, 2010)

Assets: $2.7 billion Expenses: 1.4%
YTD return (through 6/17/10): (4.0%)  

Our original thesis

This fund is a calculated risk, in some ways more than most. You’re basically betting on Northern’s ability to assemble a group of superior investors whose services are not generally available.

Our revised thesis

So far, so good.

Since inception, NMIEX has performed modestly better than its peers or its index. The fund is down about 6% since inception, its international core peer group is down about 7% and its primary benchmark is down about 9%. It has earned those modestly above-average returns with modestly below-average volatility. It substantially outperformed its peers and benchmark during the 2007-09 crash, slightly outperformed them in the May 2010 mini-crash and substantially trailed (47% for NMIEX versus 61% for its benchmark index) through during the 12 month surge following the market low. Both the better performance in the down market and the poorer performance, especially in the early phases of the rebound, are attributable to the same factor: the fund had only about half of the exposure to European financial stocks as did its peers.

In general, the seven Northern Multi-Manager funds have been entirely respectable performers over the short life spans. Like Price funds, they generally seem to do a bit better than the peers over time and rarely end a year in the basement. Northern has been pretty vigilant about monitoring the performance of its sub-advisors and has not been reluctant to replace teams that are drifting (mostly notably in the underperforming Small Cap NMMSX fund, where they’ve made three switches in about 12 months).

It’s regrettable that the fund’s expense ratio has remained virtually unchanged, despite the tripling of assets under management from 2007 through 2010. The 1.4% fee here compares to 1.1% for the average international fund, and rather less than that for the average large cap, developed market international fund.

This is a solid choice whose low minimum investment (down to $250 for folks setting up an automatic investment plan) and broad diversification might recommend it to a wide audience.

FundAlarm © 2006, 2010

Aegis Value (AVALX) – May 2009

By Editor

[fa_archives]

May 1, 2009

FundAlarm Annex – Fund Report

Fund name:

Aegis Value (AVALX)

Objective

The fund seeks long-term capital appreciation by investing (mostly) in domestic companies whose market caps are ridiculously small. On whole, these are stocks smaller than those held in either of Bridgeway’s two “ultra-small” portfolios.

Adviser:

Aegis Financial Corporation of Arlington, VA. AFC, which has operated as a registered investment advisor since 1994, manages private account portfolios, and has served as the Fund’s investment advisor since the fund’s inception. They also advise Aegis High Yield.

Manager

Scott L. Barbee, CFA, is portfolio manager of the fund and a Managing Director of AFC. He was a founding director and officer of the fund and has been its manager since inception. He’s also a portfolio manager for approximately 110 equity account portfolios of other AFC clients managed in an investment strategy similar to the Fund with a total value of approximately $80 million. Mr. Barbee received an MBA degree from the Wharton School at the University of Pennsylvania.

Management’s Stake in the Fund:

As of August 31, 2008, Mr. Barbee owned more than $1 million of fund shares. He will also be the sole owner of the adviser upon retirement of the firm’s co-founder this year.

Opening date

May 15, 1998

Minimum investment

$10,000 for regular accounts and $5,000 for retirement accounts, though at this point they might be willing to negotiate.

Expense ratio

1.43% on assets of $66 million

Comments:

Let’s get the ugly facts of the matter out of the way first. Aegis Value is consistently a one- to two-star small value fund in Morningstar’s rating system. It has low returns and high risk. The fund’s assets are one-tenth of what they were five years ago.

‘Nuff said, right?

Maybe. Maybe not. I’ll make four arguments for why Aegis deserves a second, third, or perhaps fourth look.

First, if we’d been having this discussion one year ago (end of April 2008 rather than end of April 2009), the picture would have been dramatically different. For the decade from its founding through last May, Aegis turned a $10,000 initial investment into $36,000. Its supposed “small value” peer group would have lagged almost $10,000 behind, while the S&P500 would have been barely visible in the dust. Over that period, Aegis would have pretty much matched the performance of Bridgeway’s fine ultra-small index fund (BRSIX) with rather less volatility.

Second, ultra-small companies are different: benchmarking them against either small- or micro-cap companies leads to spurious conclusions. By way of simple example, Aegis completely ignored the bear market for value stocks in the late 1990s and the bear market for everybody else at the beginning of this century. While it’s reasonable to have a benchmark against which to measure a fund’s performance, a small cap index might not be much more useful than a total market index for this particular fund.

Third, ultra-small companies are explosive: Between March 9 and April 29, 2009, AVALX returned 66.57%. That sort of return is entirely predictable for tiny, deep-value companies following a recession. After merely “normal” recessions, Morningstar found that small caps posted three-year returns that nearly doubled the market’s return. But the case for tiny stocks after deep declines is startling. Mr. Barbee explained in his January 22 shareholder letter:

. . . in the 5 years following 1931, the Fama/French Small Value Benchmark returned a cumulative 538 percent without a down year, or over 44 percent per year. Even including the damaging “double-dip” recession of 1937, the benchmark returned over 21 percent annually for the 7 years through 1938. After market declines in 1973 and 1974, over the next 7 years (1975 through 1981), the Fama/French Small Value Benchmark returned a cumulative 653 percent without a down year, or greater than 33 percent per year.

Fourth, the case for investing in ultra-small companies is especially attractive right now. They are deeply discounted. Despite the huge run-up after March 9, “the companies held by the … Fund now trade at a weighted average price-to-book of 29.4%, among the very lowest in the Fund’s nearly 11-year history.” The universe of stocks which the manager finds most attractive – tiny companies selling for less than their book value – has soared to 683 firms or about five times the number available two years ago. After the huge losses of 2008 and early 2009, the fund now packs a tax-loss carryforward which will make any future gains essentially tax-free.

Bottom Line

Mr. Barbee, his family and his employees continue to buy shares of Aegis Value. He’s remained committed to “buying deeply-discounted small-cap value stocks,” many of which have substantial cash hoards. Investors wondering “how will I ever make up for last year’s losses?” might find the answer in following his lead.

Fund website

Aegis Value fund

FundAlarm © 2009

January 2012 Funds in Registration

By Editor

Driehaus International Credit Opportunities Fund

Driehaus International Credit Opportunities Fund seeks to provide positive returns under a variety of market conditions.   It will hold long and short positions in a variety of developed and developing market fixed-income instruments.  It may use derivatives to hedge its exposure.  The fund will be non-diversified in terms of both the number of securities held and the number of nations or regions represented in the portfolio.  Its annual portfolio turnover is estimated to be 100 – 300%.  The fund will be managed by Adam Weiner who has managed emerging markets fixed income and currency strategies for Oppenheimer and Frontpoint Partners/Morgan Stanley.  In 2011, he joined Driehaus as a portfolio manager for international credit-oriented strategies.  He is not a member of the team which runs Driehaus’s other two “nontraditional bond” funds. $10,000 minimum initial investment.  Expenses not yet set.

Artisan Small Cap (ARTSX), December 2011

By Editor

Objective

The fund pursues “maximum long-term capital growth” by investing a broadly diversified portfolio of small cap growth stocks.  For their purposes, “small cap” means “under $2.5 billion in market cap at the time of purchase.”   As of 9/30/11, they held 70 stocks.  They cap individual positions at 3% of assets, though some might appreciate past that point.  They have small stakes in both developed (2.5%) and emerging (2.3%) markets.   The managers look for companies with at least two of the following franchise characteristics:

Low cost production capability,

Possession of a proprietary asset,

Dominant market share, or a

Defensible brand name.

If the stock is reasonably priced and they have reason to believe that the firm’s prospects are brightening, it becomes a candidate for acquisition.

Adviser

Artisan Partners of Milwaukee, Wisconsin.   Artisan has five autonomous investment teams that oversee twelve distinct U.S., non-U.S. and global investment strategies. Artisan has been around since 1995.  As of 9/31/2011 Artisan Partners had approximately $51 billion in assets under management.  That’s up from $10 billion in 2000. They advise the 12 Artisan funds, but only 6% of their assets come from retail investors.

Manager

The fund is managed by the same team that manages primarily-midcap Artisan Mid Cap (ARTMX) and primarily-large cap Artisan Growth Opportunities (ARTRX) funds.  The marquee name would be Andy Stephens, founding manager of ARTMX and, earlier, co-manager of Strong Asset Allocation.  Craig Cepukenas has been an analyst with the fund since 1995 and a co-manager since 2004.  The other team members (Mr. Stephens plus Jim Hamel, Matt Kamm, Jason White) joined in the last two years.   Their work is supported by seven analysts.

Management’s Stake in the Fund

Each of the managers invests heavily in each of the three funds.  Mr. Hamel has over a million in each fund and Mr. Stephens has over $2.5 million spread between the three, while the other managers (generally younger) have combined investments well over $100,000.

Opening date

March 28, 1995.

Minimum investment

$1000 for regular accounts, reduced to $50 for accounts with automatic investing plans.  Artisan is one of the few firms who trust their investors enough to keep their investment minimums low and to waive them for folks willing to commit to the discipline of regular monthly or quarterly investments.

Expense ratio

1.2%, on assets of $1.8 Billion (as of June 2023).

Comments

ARTSX was Artisan’s first fund, launched as a vehicle for Carlene Murphy Ziegler to showcase her talents.  Ziegler had been a star at Strong, and her new fund returned 35% in its first year, about 50% better than its peers.   In under a year, the fund had gathered $300 million in assets.  It closed to new investors in February of 1996, a decision for which it was rightly lauded.

And then, something happened.  The fund, mild-mannered by growth fund standards, lagged its peers during the “hot” years of the late 1990s, rallied briefly at the turn of the century, then settled back into a long decade of mediocre returns.  Artisan tried to reignite the fund by bringing in Ziegler’s former co-manager, Marina Carlson, but nothing seemed to work.  Even in its worst years the fund was never awful, but it was also never really good again.  Ziegler retired from managing the fund in 2008 and Carlson in 2009.

Then, in 2009, Artisan found the fix.  They gave management responsibility to their five-manager Growth Team.  Artisan’s fund management is structured around a series of team.  Each team has a distinctive style (US Value, International Value, Growth, Global Equity, and Emerging Markets) and each has a distinctive, consistent investment discipline.  As each team proves its ability to provide strong, consistent, risk-conscious performance in one arena, Artisan allows them to extend their process to another.  The U.S. Value team, for example, started with Small Cap Value (ARTVX), which was wildly successful and closed to new investors.  They began managing Mid Cap Value (ARTQX) in 2001, posted a series of exceedingly strong years, and decided to add the predominantly large cap Artisan Value (ARTLX) fund in 2006.  The Growth Team started with Mid Cap (1997), added Growth Opportunities (2008) and then Small Cap (2009).

The practice of keeping teams together for the long term, allowing them to perfect and then gradually extend their investment disciplines, has produced consistently strong results for Artisan’s investors.  With the exception of their Emerging Markets fund (which is not available to retail investors), over the last three years every Artisan fund has earned four or five stars from Morningstar and every one is ranked above average in Lipper’s ratings.  Regardless of the time period you check, no Artisan fund (excepting, again, Emerging Markets) has a Morningstar rating below three stars.

The managers’ discipline is clear and sensible.  One part of the discipline involves security selection: they try to find companies with a defensible economic moat and buy them while the price is low and the prospect for rising profits looms.  Philosophically, they are driven to hunt for accelerating profit cycles. Their edge comes, in part, from their ability to identify firms which are in the early stages of an accelerating profit cycle. Their intention is to get in early so they can benefit from a long period of rising profits. The other part is capital allocation: rather than pour money into a new holding, they begin with small positions in firms whose profits are just beginning to accelerate, increase that toward their 3% asset cap as the firm achieves sustained, substantial profits, and then begins selling down the position when the stock becomes overvalued or the firm’s profitability slips.

Since taking charge of Small Cap, the fund has performed exceptionally well.  $10,000 invested when Mr. Stephens & co. arrived would have grown to $13,800 (as of 11/29/11) while their average peer would have returned $12,700.  The fund posted weak relative and strong absolute returns during the “junk rally” in 2010, making 20.5% for its investors.  In 2011, the fund finished the first 11 months in the top 2% of its peer group with a return of 5.2% (compared to a loss of nearly 8% for its average peer).

Bottom Line

Artisan has an entirely admirable culture.  Their investment teams tend to stick together for long periods, with occasional promotions from the analyst ranks to recognize excellence.  They are uniformly risk conscious, deeply invested in their funds and singularly willing to close funds before asset bloat impairs performance.  As of December 2011, half of Artisan’s retail funds (five of 10) are closed to new investors.

The Growth Team follows that same pattern, and has posted strong records in their other charges and in their two-plus years here.  Investors looking for a rational small cap growth fund – one which is competitive in rising markets and exceptionally strong in rocky ones would be well-advised to look at the reborn Artisan Small Cap fund.

Fund website

Artisan Small Cap fund

 

© Mutual Fund Observer, 2011.  All rights reserved.  The information here reflects publicly available information current at the time of publication.  For reprint/e-rights contact David@MutualFundObserver.com.

December 2011 Funds in Registration

By Editor

Aviva Investors Emerging Markets Local Currency Bond Fund

Aviva Investors Emerging Markets Local Currency Bond Fund popped up in the SEC database this month.  Oddly enough, the fund already exists but is not available for sale to either individual or institutional investors.  The coolest aspect of the offering is its heritage; it’s based on a SiCav, “a sub-fund of a socioto anonyme formed under the laws of the Grand Duchy of Luxembourg.”  The least cool aspect is that the fund in question consistently trails its index.  When available, it will be team managed, will charge1.15% and will be available for a $5000 minimum.

FAM Small Cap Fund

FAM Small Cap Fund will attempt to “maximize long-term return on capital” by investing in a non-diversified portfolio of quite small companies.  They’re targeting stocks valued at between $50 million and $1 billion.  The managers will determine each firm’s “true business worth” as the basis for their investments.   The managers are Thomas Putnam, Chairman of the adviser, and Marc Roberts, a research analyst for them.   Mr. Putnam’s two other FAM funds, Value and Equity-Income, have been solidly unspectacular for years. The minimum initial purchase is  $5000 for a regular  account and $2000 for an IRA.   Expenses of 1.5%. The proposed launch date is February 12, 2012.

Forward Managed Futures Strategy Fund

Forward Managed Futures Strategy Fund will pursue long term total return.  The Fund will generally invest in the futures contracts included in the Credit Suisse Multi-Asset Futures Strategy Index.  The primary asset classes included in the CSMF Index are commodities, currencies, equity indexes and fixed income. The CSMF Index will take long positions in futures contracts with strong positive positioning relative to its 250-day moving average price and short positions in futures contracts with strong negative positioning relative to the 250-day moving average price.   Their goal is positive returns regardless of market conditions, with a target volatility level of approximately 15% per year.  This strategy is employed by a variety of managed futures funds; they work really well when markets show sustained movements in either direction but suffer in volatile, directionless ones. The Fund will be team managed.  The team leader is Nathan Rowader, Forward’s Director of Investments.  The other team members include Forward’s president and CIO, Jim O’Donnell, Paul Herber and David Ruff. Expenses not yet set.  Investment minimum is $4000, reduced to $2000 for Coverdells and accounts with e-delivery options, $500 for accounts with an automatic investment plan.

Hussman Strategic Dividend Value Fund

Hussman Strategic Dividend Value Fund seeks total return through a combination of dividend income and capital appreciation, with added emphasis on protection of capital during unfavorable market conditions.  It pursues this objective by investing primarily in dividend-paying common stocks.  The Fund has the ability to vary its exposure to market fluctuations based on factors its investment manager believes are indicative of prevailing market return and risk characteristics.  John Hussman, founder and manager of nearly $9 billion in the three other Hussman funds, will run the show.  In general, the Hussman funds have been more distinguished for their strong risk management than for exceptional long-term returns.  Expenses of 1.27% after a substantial “fee deferral.” The minimum initial investment is $1,000, except the minimum is $500 for IRA/UTMA accounts.  Oddly, Morningstar already lists the fund on its site, though it’s not scheduled to open until February 12, 2012.

Satuit Capital U.S. Small Cap Fund

Satuit Capital U.S. Small Cap Fund will seek long-term growth by investing in a diversified portfolio of U.S. small cap stocks. Small cap translates to “comparable to the Russell 2000.”  They’ll start with quantitative screens to construct a Focus List, and then qualitative ones to sort through the Focused stocks.  The management team is the same folks who run Satuit Capital U.S. Emerging Companies (SATMX).  It includes Robert Sullivan, Satuit’s chairman, president and Chief Investment Officer.  Here’s the good news: SATMX (formerly Satuit Microcap) is a really strong fund, with returns in the top 1% of its peer group over the past decade.  The bad news: Satuit offered a small cap fund once before, became discouraged and shut it down rather quickly.  Expenses will be 1.5%. The minimum initial investment is quite low, at $1000.

Satuit Capital U.S. SMID Cap Fund

Satuit Capital U.S. SMID Cap Fund seeks to provide investors with long-term capital appreciation by investing in a diversified portfolio of U.S. small- to mid-cap stocks.  SMID is operationalized as “comparable to the Russell 2500” index.  The managers will use the same combination of quantitative and qualitative screens here as they do in their small cap fund. The management team is the same folks who run Satuit Capital U.S. Emerging Companies (SATMX).  It includes Robert Sullivan, Satuit’s chairman, president and Chief Investment Officer.   Expenses will be 1.5%. The minimum initial investment is quite low, at $1000.

Wasatch Frontier Emerging Small Countries Fund

Wasatch Frontier Emerging Small Countries Fund will pursue long-term capital appreciation by investing in a non-diversified portfolio of stocks represented in “frontier market or small emerging market country.”  The firms in question need either to be domiciled in those markets, or to generate more than 50% of revenues or earnings in them.  Wasatch warns that these include  “the least developed markets even by emerging markets standards.”  Nominally it’s an all-cap fund, practically it’s a small cap one.  The fund will be managed by Laura Geritz who helps manage the Wasatch Emerging Markets Small Cap and International Opportunity funds.  She has an interesting history, having come up through the ranks from “bilingual customer service representative” to “analyst” to “manager.”  Expense ratio not yet announced, but it’ll be high.  The minimum initial investment is $2000 except for college savings accounts and funds with an automatic investing plan, in which case the minimum is reduced to $1000.  The proposed launch date is late January, 2012.

November 2011 Funds in Registration

By Editor

Ariel Global Equity Fund

Ariel Global Equity Fund pursues long-term capital appreciation. The fund will invest in between 40-150 stocks, foreign, domestic and emerging. Unlike Ariel’s domestic funds, there are no social responsibility screens here. Rupal J. Bhansali will manage the fund. Mr. Bhansali recently joined Ariel. Before that, he was Head of International Equities at MacKay Shields, the institutional investing arm of New York Life. Expense ratio of 1.4%, $1,000 minimum initial investment.

Ariel International Equity Fund

Ariel International Equity Fund pursues long-term capital appreciation. The fund will invest in between 40-150 developed market stocks outside the US. Unlike Ariel’s domestic funds, there are no social responsibility screens here. Rupal J. Bhansali will manage the fund. Mr. Bhansali recently joined Ariel. Before that, he was Head of International Equities at MacKay Shields, the institutional investing arm of New York Life. Expense ratio of 1.4%, $1,000 minimum initial investment.

ASTON/Silvercrest Small Cap Fund

ASTON/Silvercrest Small Cap Fund The manager is Roger Vogel, Managing Director of Silvercrest and lead portfolio manager for Silvercrest’s small cap value investment strategy. Prior to Silvercrest, he co-managed both small-cap and large-cap portfolios for Credit Suisse. His private account composite has returned 6.4% since inception in 2003, while the Russell 2000 Value returned 4%. For better or worse, most of his advantage comes in a dramatic outperformance in 2008. Expense ratio of 1.41%, minimum initial investment of $2500, reduced to $500 for IRAs.

Forward Endurance Fund

Forward Endurance Fund seeks long-term growth by investing, long and short, in a global stock portfolio. Their focus will be “to identify trends that may have large and disruptive impacts on global business markets.” David Readerman and Jim O’Donnell will manage the fund. They recently took over Forward Small Cap as well. Expenses not yet set, $4000 minimum initial investment, reduced to $2000 if you sign up for eDelivery, $500 for accounts with automatic investing plans.

Forward Floating NAV Short Duration Fund

Forward Floating NAV Short Duration Fund seeks maximum current income consistent with the preservation of principal and liquidity. Their investment strategy is generic (investment grade, US and non-US, government and corporate debt), but they’re benchmarked against the three-month T-bill and the prospectus goes to pains to say that they’re not a money market. That, of course, says that they’re trying to market themselves as “better than a money market.” David L. Ruff and Paul Broughton will manage the fund. Both have extensive experience, though not in fund management. Expenses not yet set, $4000 minimum initial investment, reduced to $2000 if you sign up for eDelivery, $500 for accounts with automatic investing plans.

FPA International Value Fund (FPIVX)

FPA International Value Fund (FPIVX) seeks above average capital appreciation while attempting to minimize the risk of capital loss. FPA looks in all their funds for well-managed, financially strong, high quality businesses whose stock sells at a significant discount. The managers, Eric Bokota and Pierre Py, are both former Harris Associate (i.e., Oakmark) analysts. Initial expense ratio of 1.98% (they don’t believe in fee waivers), but at least the minimum initial investment ($1500) is low.

Gerstein Fisher Multi-Factor International Growth Equity Fund

Gerstein Fisher Multi-Factor International Growth Equity Fund will seek long-term capital appreciation. They’ll focus on “smaller growth companies that may also display characteristics typically associated with value-oriented investments.” Gregg S. Fisher, the firm’s chief investment officer, will manage the fund. Expenses of 1.37%, $5,000 minimum initial investment.

Granite Value Fund

Granite Value Fund will seek long-term growth by investing globally in about 40 mid- to large-cap stocks. Scott B. Schermerhorn will manage the fund. Expense ratio of 1.35%, $10,000 minimum initial investment, reduced to $5000 for tax-advantaged accounts.

IASG Managed Futures Strategy Fund (“N” shares)

IASG Managed Futures Strategy Fund (“N” shares) will seek positive long-term absolute returns. The plan is to invest 75% in fixed income and 25% in a combination of “commodity pools” and ETFs. This has “bad idea” written all over it. The strategy is obscure and depends, largely, on investing in a bunch of actively managed “pooled investment vehicles,” each of which has a manager pursued his own commodity strategy, often derivative based or in ETFs that have price momentum. The fund will be managed by Perry Lynn and JonPaul Jonkheer of IASG Capital Management. $2500 investment minimum, expense ratio not yet set.

Kottke Commodity Strategies Fund (“N” shares)

Kottke Commodity Strategies Fund (“N” shares) will seek positive absolute returns. The plan is to invest 75% in cash and 25% in exchange-traded commodity futures and options. The cash – currently offering negative real returns – is collateral for the commodity positions. The fund will be managed by a team led by Michael Crouch (“head trader”). $2500 investment minimum, expense ratio not yet set.

Miller Tabak Merger Arbitrage and Event Driven Fund

Miller Tabak Merger Arbitrage and Event Driven Fund will pursue capital appreciation by investing the stocks of companies that are undergoing, or may undergo, “transformational corporate events” such as “announced merger transactions, announced or have possible spin-offs, split-offs or sales of divisions; businesses that are exploring “strategic alternatives” such as stock buybacks, or sales of the entire companies; companies that may announce or have completed attractive acquisitions; and other special situations.” Michael Broudo will manage the fund, and also manages Miller Tabak’s merger arbitrage and event-driven equity group. Miller Tabak is a heavy weight institutional firm that executes trades for hedge funds and institutions, and this has the feel of a “friends and family” fund for those unable to afford MT’s private accounts. $1000 investment minimum, but an expense ratio (after waivers!) of 2.75%.

Scharf Fund

Scharf Fund will seek long-term capital appreciation. The fund will mostly invest in stocks (daringly, the manager targets stocks which “have significantly more appreciation potential than downside risk over the long term”), might invest up to 50% in international stocks and might invest up to 30% in bonds. Brian A. Krawez, former “Head of Research at Belden and Associates<” will manage the fund. $10,000 investment minimum, reduced to $5000 for tax-advantaged accounts and those with automatic-investing plans, expense ratio of 1.25%.

Sierra Strategic Income Fund

Sierra Strategic Income Fund wants “to provide total return (with income contributing a significant part) and to limit volatility and downside risk.” It will be a fund of income funds, including funds or ETFs which invest in foreign, emerging or domestic bonds, issued by governments or corporations, and REITs. They look with asset classes with price momentum, try to find high-alpha managers in those classes and have a fairly severe stop-loss discipline. The fund will be managed by a team from Wright Fund Management, which has been using this strategy in separate accounts since the late 1980s. Expenses not yet set, $10,000 minimum initial investment.

TFS Hedged Futures Fund

TFS Hedged Futures Fund will pursue long-term capital appreciation. It will be a global long/short equity fund. It will be managed by a six-person team. Expenses, after waivers, of 2.30%, $5000 minimum investment.

Vanguard Emerging Markets Government Bond Index Fund

Vanguard Emerging Markets Government Bond Index Fund will track the performance of the Barclays Capital Emerging Markets Sovereign Index (USD) that measures the investment return of U.S. dollar-denominated bonds issued by governments of emerging market countries. They anticipate a weighted average maturity of 10-15 years. Greg Davis and Yan Pu will manage the fund. Expense ratio of 0.50%, minimum initial investment is $3000.

Vanguard Target Retirement 2060 Fund

Vanguard Target Retirement 2060 Fund will seek to provide capital appreciation and current income consistent with its current asset allocation. It invests in just three underlying funds, Vanguard Total Stock Market Index (63%), Vanguard Total International Stock Index (27%) and Vanguard Total Bond Market II Index (10%). As with all such funds, it was slowly become more conservative as 2060 approaches. (Given that I’m not going to be here to confirm it, I’ll take Vanguard’s word on the matter.) The investment minimum is a remarkably low $1000, expense ratio is equally remarkable, at 0.18%.

Vanguard Total International Bond Index Fund

Vanguard Total International Bond Index Fund will track the Barclays Capital Global Aggregate ex-USD Float-Adjusted Index (Hedged) that measures the investment return of investment-grade bonds issued outside of the US. They anticipate a weighted average maturity of 5-10 years. Greg Davis and Yan Pu will manage the fund. Expense ratio of 0.40%, minimum initial investment is $3000.

William Blair Small-Mid Cap Value Fund

William Blair Small-Mid Cap Value Fund will seek long-term capital appreciation, which they’ll pursue by investing in domestic small- and mid-cap stocks. The management team are the same folks who run Blair Small Cap Value and Mid Cap Value, neither of which is bad. Expenses not yet set, $5000 minimum initial investment, reduced to $3000 for IRAs.

Manager changes, Archive

By Editor

Because bond fund managers, traditionally, had made relatively modest impacts of their funds’ absolute returns, Manager Changes typically highlights changes in equity and hybrid funds.

Fund Out with the old In with the new Date
Absolute Opportunities (AOFOX) No one’s out Pine Cobble Capital joins five other institutional firms sub-advising the fund. 07/11
Alger Health Sciences (AHSAX) David Farhadi Dan Chung and Maria Liotta. Chung, Alger’s CIO/CEO, has helped run the fund since 2005 05/11
Allianz RCM Disciplined International Equity (RAIGX). Ara Jelalian Steven Berexa 08/11
Allianz RCM Global Commodity Equity (ARMAX), formerly Allianz RCM Global Resources No one, but . . . Alec Patterson joined the management team and now co-manages with Paul Strand 09/11
Alpine Cyclical Advantage Property Fund (EUEYX) No one’s out . . . David Kruth, who has experience as a Goldman Sachs global real estate manager, joins as an “associate manager” 04/11
Alpine Dynamic Dividend (ADVDX) Andrew Kohl The rest of the portfolio team (Jill Evans, Kevin Shacknofsky, Joshua Duitz) is joined byBrian Hennessey. 04/11
Altegris Managed Futures Strategy (MFTAX) Rodney Square Management Altegris Advisors is hunting for a new manager. In the interim, they’ll run the fund themselves. 07/11
American Century International Bond (BEGBX) No one, but . . . Simon Chester joined the management team 08/11
Aston/Barings International (ABIIX) Nathan Griffiths Former co-manager David Bertocchi becomes the lead manager. 04/11
Aston/Fortis Real Estate (AARIX) Fortis Investment Management Harrison Street Securities, which will occasion a renaming to Aston/Harrison 07/11
BlackRock International Bond Portfolio (BIIAX) Andrew Gordon, who’s been with the fund since 1997 Scott Thiel joins Yoni Saposh 08/11
BlackRock Science & Technology Opportunities (BGSAX) No one, but . . . Paul Ma joined the management team of Thomas Callan, Jean Rosenbaum, and Erin Xie. 09/11
BlackRock World Income Fund (MDWIX) Andrew Gordon, who’s been with the fund since 2006 Scott Thiel joins Yoni Saposh 08/11
Buffalo China (BUFCX) No one, but . . . Shelly Ma joins as a co-manager on the steadily-improving BUFCX. In the past five years it has trailed 98% of its peers, then 96%, 91%, 69% and – over the first three quarters of 2011, a breakthrough – 49%. 09/11
Buffalo High Yield (BUFHX) Kent Gasaway The rest of the management team remains in place 09/11
Buffalo International (BUFIX) No one, but . . . Shelly Ma joins as a co-manager, whose new fund is merely “consistently mediocre” rather than “eye-watering” (see Buffalo China) 09/11
Buffalo Large Cap (BUFEX) Grant Sarris, in part of a larger management realignment The rest of the management team remains in place 09/11
Calvert Bond (CSIBX) Gregory Habeeb Matt Duch 09/11
Calvert Income (CFICX) Gregory Habeeb Michael Abramo 09/11
Calvert Large Cap Growth (CLCIX) John Montgomery, president of Bridgeway A team from Atlanta Capital Management will run the fund until its merger into Calvert Equity (CSIEX), which they also run. 05/11
Calvert Social Index (CSXAX) Kevin Yousif Eric Lessnau and David Jones 05/11
Columbia Dividend Income (LBSAX) No one goes but . . . David King and Michael Barclay join Richard Dahlberg and Scott Davis 04/11
Columbia Emerging Markets Opportunity (IDEAX) Vanessa Donegan Irina Miklavchich and existing manager Rafael Polatinsky. 05/11
Columbia Global Equity (IGLGX) Andrew Holliman Esther Perkins joins current co-manager Stephen Thornber 06/11
Columbia Global Extended Alpha (RTAAX) Andrew Holliman Stephen Thornber and Jeremy Podger. 06/11
Columbia Mortgage and Asset Backed (NMTGX) Lee Reddin Michael Zazzarino, who has been co-manager of the fund since 2007, will be lead manager. 09/11
Davidson Multi-Cap Equity Fund William B. Whitlow is retiring The lead manager, Brian Clancy, remains but gains a 7th co-manager, Paul Condrat 08/11
Dreyfus Global Sustainability (DGYAX) Five new co-managers from Mellon Capital were added in mid-April. 04/11
DWS Climate Change (WRMAX) Nicolas Huber Andrew Pidden comes in, and the fund becomes DWS Clean Tech 08/11
DWS Emerging Markets Equity (SEKAX) Thomas Gerhardt who joined this modestly regrettable $300 million fund got canned. Good question. In a particularly cruel shot, DWS announced that “until May 9, 2011,” co-manager Rainer Vermehren is in charge. Vermehren joined the same day as Gerhardt and appears slated to be employed seven weeks longer. 04/11
DWS Gold & Precious Metals (SGDAX) Pierre Martin The rest of the management team remains in place 09/11
DWS International (SUIAX) Nikolaus Poehlmann, Andreas Wendelken, and Mark Schumann – another undistinguished team that was hired just after the Emerging Markets team. Jason Inzer and Thomas Voecking who, according to company documents, will sort of collate the recommendations of thousands of analysts 04/11
DWS Strategic Value (KDHAX) Volker Dosch, Oliver Pfeil, and Thomas Schuessler – who were undistinguished in the execution of their post. Jason Inzer and Thomas Voecking (see DWS International) 04/11
Eagle Growth & Income Fund (HRCVX) for reasons unclear (it’s been a great fund), Thornburg Investment Management has been terminated and an in-house team (Edmund Cowart, David Blount and John Pandtle) replaces them. They manage a billion in “other accounts” but no funds. 04/11
Federated Balanced Allocation (BAFAX) John Leibee Founding managers Hans Utsch and Lawrence Auriana, who have been here since 1986, lead a five-person management team. 07/11
Federated Capital Appreciation (FEDEX) Carol Miller James Grefenstatte joins Dean Kartsonas 05/11
Federated Capital Income (CAPAX). No one, but . . . Christopher Smith joined the management team 08/11
Federated Kaufmann (KAUAX) John Leibee Hans und Franz live on! Which is to say the founding managers, Hans Utsch and Lawrence Auriana, who have been here since 1986, continue to lead a five-person management team. 07/11
Federated Kaufmann Large Cap (KLCAX) John Leibee Founding managers Hans Utsch and Lawrence Auriana, who have been here since 1986, lead a five-person management team. 07/11
Fidelity Advisor Equity Income (FEIAX) Stephen Petersen James Morrow and Adam Kramer 04/11
Fidelity China Region (FHKCX) Joseph Tse, who has a great 2010 and good 2011 Bobby Bao, who manages some of Fidelity’s Canadian funds (AsiaStar) and portions of their Pyramis portfolios 08/11
Fidelity Commodity Strategy (FFCSX) Jeffrey Adams, who works for Fido’s quant Geode arm Bobe Simon, Lou Bottari, Patrick Waddell, Maximilian Kaufman, and Eric Matteson. 05/11
Fidelity Income Replacement and Jonathan Shelno Andrew Dierdorf and new manager Christopher Sharpe 07/11
Fidelity International Value (FIVLX) George Stairs, who I decried as a mediocre Putnam manager when Fidelity hired him Alexander Zavratsky 09/11
Fidelity Japan (FJPNX) Robert Rowland Rei Shigekawa. This change was profiled with some concern by Chuck Jaffe of CBS/Marketwatch. 04/11
Fidelity Magellan (FMAGX) Harry Lange, the third Fidelity superstar to flame-out here Jeffrey Feingold becomes the fourth Fidelity superstar to fling himself on Lynch’s Legacy 09/11
Fidelity NASDAQ Composite Index (FNCMX) Jeffrey Adams, another Geode guy Bobe Simon, Lou Bottari, Patrick Waddell, Maximilian Kaufman, and Eric Matteson. 05/11
First Eagle Gold (SGGDX) No one Chris Kwan joined Abhay Deshpande and Rachel Benepe. 06/11
First Investors Blue Chip (FIBCX) Matthew Wright Edwin Miska and Sean Reidy 05/11
Forward Emerging Markets (FEMMX) Nidhi Mahurkar Peter Jarvis. A solid fund, team run, that’s ground through 23 managers. 05/11
Forward Funds’ Forward Growth (FFGRX) Peter J. Niedland The rest of the management team remains in place 09/11
Forward Growth Fund Peter J. Niedland is “hereby deleted” Mr. Niedland was a recent addition to the portfolio team, the rest of which remains. 08/11
GAMCO Westwood Mighty Mites (WEIMX) No one. Elizabeth Lilly joins the existing team of Mario Gabelli, Laura Linehan, Walter Walsh 07/11
Generation Wave Growth (GWGFX) Jeffrey Middleswart Gerry Sullivan, who also manages the quant Industry Leaders fund (ILFIX). GS is the 10thmanager in 10 years, with the changes here paralleling changes in Vice Fund 07/11
ING Equity Dividend (IEDAX) Christopher Corapi joined the management team 05/11
ING Global Bond (INGBX). No one, but . . . Robert Robis joins Michael Mata and Christine Hurtsellers. 08/11
ING Global Equity Dividend (IAGEX) Moudy El Khodr Bruno Springael will join Nicholas Simar, and Herman Klein. 05/11
ING Global Opportunities (IAFAX) Tjeert Keijzer and Tycho van Wijk Huub van der Riet and Alex van der Laan join Dirk-Jan Verzuu on this sad sack little fund. 05/11
ING Global Resources (IGRAX) No one, but . . . John Bailey became the third c0-manager 08/11
ING International Small Cap Multi-Manager (NTKLX) Qi Zeng Patrick McCafferty, who is part of the Acadian Management sleeve of the portfolio 04/11
ING International Value (NIVAX) Glenn Carlson, Brent Woods, Jim Brown, Amelia Morris, Brent Fredberg, Jeffrey Germain, and Paul Hechmer Marin Jansen, David Rabinowitz, and Joseph Vultaggio. 05/11
ING Janus Contrarian (IJCAX) Janus Capital Management ING Investment Management, though the fund will merge into ING Growth and Income in 2012. 07/11
Invesco Global (ATKAX) Heather Peirce Dana Love, her former co-manager 04/11
Invesco Global Equity (GTNDX) Michael Fraikin Ralph Coutant and Andrew Waisburd join Uwe Draeger, Karl-Georg Bayer and Jens Langewand 05/11
Invesco Global Growth (AGGAX) “Senior” portfolio manager Barrett Sides retires Sides’ three co-managers will carry on without him. It’s a mediocre, but not bad, fund. 06/11
Invesco International Growth (AIIEX) “Senior” portfolio manager Barrett Sides is retiring but won’t be missed enough to be replaced. It’s a very solid fund with a well-established team. This is the 8th Invesco fund to see a manager change since May 2011. 06/11
Invesco Leisure (ILSAX) Jonathan Mueller Ido Cohen and existing manager Juan Hartsfield. 05/11
Invesco Select Real Estate Income (ASRAX) James Trowbridge Joe Rodriguez, Jr., Mark Blackburn, Paul Curbo, and Darin Turner. 05/11
Invesco Small Companies (ATIAX) Ted Chisholm Robert Mikalachki, Virginia Au and Jason Whiting 04/11
Invesco Structured Core (SCAUX) Anthony Shufflebotham Daniel Tsai and Andrew Waisburd get added to the existing team 05/11
Janus Contrarian (JACNX) David Decker who has run the fund since ’96. Very independent portfolio, very high volatility. Dan Kozlowski. DK left Janus to run a hedge fund. Apparently part of the deal to secure his return was having Janus become a partner in his hedge fund. 05/11
Janus Fund (JANSX) Daniel Riff leaves to become sole manager of Janus Long/Short Burt Wilson, who has been with Janus for six years, joins Jonathan Coleman who has co-managed the fund since 2007 05/11
Janus Global Bond (JGBAX) No one but. . . Chris Diaz was added as a third manager 05/11
Janus Global Technology (JAGTX) Barney Wilson Brad Slingerland, who ran the fund with Wilson in 2006-08. He’ll Tweet for you as bradsling. 05/11
Janus Long-Short (JALSX) David Decker whose record is low correlation, high risk, modest returns Daniel Riff, who has been comanaging the fund, will become the sole manager 05/11
John Hancock Greater China Opportunities (JCOAX) No one is going but Kai Kong Chay joined the management team of Terrance Pak Hing Chum, and Ronald Chan. 05/11
JPMorgan Asia Equity (JAEAX Andrew Swan Joshua Tay, Pauline Ng, and new manager Patrick Chiu. 05/11
JPMorgan Asia Equity (JAEAX) No one, but . . . Patrick Chiu joined the management team 08/11
JPMorgan Multi-Sector Income (JSIAX) Jon Jonsson The rest of the portfolio team (Robert Michele and Iain Stealey) are joined by Nicholas Gartside and Matthew Pallai. 04/11
Legg Mason Capital Management All Cap Fund (SPAAX) David Nelson Jay Leopold and Bill Miller remain at this overpriced underperformer. 04/11
Loomis Sayles Global Equity and Income (LGMAX) Mark Baribeau Daniel Fuss, David Rolley, and Warren Koontz 05/11
Loomis Sayles Small Cap Value (LSCRX) Daniel Thelen Joseph Gatz 05/11
Lord Abbott allocation funds, generally A committee The Chairman. Robert Gerber is now the solo manager, in place of a management committee which he formerly chaired. 08/11
MainStay International Equity (MSEAX) Rupal Bhansali Edward Ramos 06/11
Managers AMG FQ Tax-Managed U.S. Equity (MFQAX) Andrew Berkin David Chrisman 06/11
Managers AMG FQ U.S. Equity (FQUAX) Andrew Berkin David Chrisman 06/11
Managers Cadence Capital Appreciation No one, but . . . Robert Ginsberg, formerly of Invesco and Putnam, joined the management team 08/11
Managers Cadence Emerging Companies No one, but . . . Robert Ginsberg joined the management team 08/11
Managers Cadence Focused Growth No one, but . . . Robert Ginsberg joined the management team 08/11
Managers Cadence Mid-Cap No one, but . . . Robert Ginsberg joined the management team 08/11
Marshall Mid-Cap Value (MRVIX) No one goes but . . . Gregory Dirkse and Brian Janowski join Matthew Fahey in running the fund. 04/11
Marsico 21st Century (MXXIX) Cory Gilchrist, who was very optimistic about an economic turnaround Brandon Geisler, who isn’t. 09/11
Marsico Global (MGLBX), Cory Gilchrist James Gendelman and Tom Marsico 09/11
MassMutual Select Diversified International (MMZAX) AllianceBernstein Gerd Woort-Menker, Jeroen Huysinga, and Georgina Perceval Maxwell of JP Morgan 06/11
MassMutual Select Overseas (MOSAX) AllianceBernstein Gerd Woort-Menker, Jeroen Huysinga, and Georgina Perceval Maxwell of JP Morgan will join teams from Harris Associates and MFS. 06/11
MFS International Growth (MGRAX) No one In January 2012, Kevin Dwan joins David Antonelli. No explanation for the unusually long lead time. 07/11
Morgan Stanley Global Strategist (SRTAX) No one Cyril Moullé-Berteaux joins Mark Bavoso 07/11
Morgan Stanley Institutional Balanced (MPBAX) No one Cyril Moullé-Berteaux joins Mark Bavoso 07/11
Nationwide International Value (NWVAX) AllianceBernstein UBS Global Asset Management 06/11
Nuveen Strategy Balanced Allocation (FSGNX), No one, but . . . James Colon joins existing manager David Cline 06/11
Nuveen Strategy Conservative Allocation (FSFIX) No one, but . . . James Colon joins existing manager David Cline 06/11
Nuveen Strategy Growth Allocation (FAGSX) No one, but . . . James Colon joins existing manager David Cline 06/11
Oakmark International Small Cap (OAKEX) No one’s leaving Michael Manelli, an international equities analyst, joined David Herro who has managed the fund since inception. Herro manages three funds and serves as CIO, so this might simply be stress relief. 05/11
Old Mutual TS&W Mid-Cap Value (OTMAX) John Pickler Brett Hawkins 06/11
Oppenheimer Main Street Small & Mid Cap (OPMSX) Benjamin Ram Raymond Anello joins Matthew Ziehl and Raman Vardharaj 05/11
Penn Series Small Cap Value James B. Otness is being phased out by 12/31/11 The rest of the team is going to work just a bit harder. 08/11
PIMCO Emerging Markets Bond (PAEMX) No one, but . . . Ramin Toloui will be joined by Michael Gomez 09/11
PIMCO Global Advantage Strategy (PGSAX) No one, but . . . Andrew Balls was added as co-manager 09/11
Principal SmallCap Blend (PLLAX), Thomas Morabito Brian Pattinson will also join the management team 08/11
Principal SmallCap Growth (PMAAX). Thomas Morabito Brian Pattinson will also join the management team 08/11
Principal SmallCap Value (PSUAX), Thomas Morabito Phil Nordhus and Brian Pattinson 08/11
Quant Small Cap (QBNAX) Matt Williams Robert von Pentz and Rhys Williams 04/11
Rochdale Fixed Income Opportunities (RIMOX) Stefan Pinter, Theodore Stohner, and Maxim Matveev of GML Capital have been added to the teams managing the fund. The other teams are from Seix Investment Advisers and Federated. 06/11
RS Small Cap Growth (RSEGX) Allison Thacker, one of four co-managers Three co-managers remain. Ms. Thacker is leaving to manage Rice University’s $4 billon endowment. 09/11
RS Technology (RSIFX) Allison Thacker Three comanagers remain. Ms. Thacker is leaving to manage Rice University’s $4 billon endowment. 08/11
Russell Emerging Markets (REMAX) T. Rowe Price Delaware Management Company and Victoria 1522 Investments join five other institutional teams already on the fund 05/11
Russell Tax-Managed US Large Cap (RTLAX) Turner Investment Partners (to whom this happens a lot) Sustainable Growth Advisers, which joins four other institutional teams on the fund 05/11
Russell US Quantitative Equity (REQAX) No one . . . Russell decided that four sub-advisers weren’t enough, so they added PanAgora Asset Management 05/11
Russell US Small & Mid Cap (REBSX) Robert Kuharic Jon Eggins 05/11
Schwab Core Equity (SWANX) Vivienne Hsu The rest of the management team remains in place 09/11
Schwab Dividend Equity (SWDSX) Vivienne Hsu The rest of the management team remains in place 09/11
Schwab Premier Equity (SWPSX) Vivienne Hsu, who also chips in on several other “active equity” funds No one yet named, presumably her co-managers will become lead managers 08/11
Sentinel Mid Cap Value (SYVIX) Steinberg Asset Management Effective 08/11, Crow Point Partners – run by some former Evergreen managers – takes over 06/11
Sentinel Mid Cap Value (SYVIX) Steinberg Asset Management Peter DeCaprio and Timothy O’Brien of Crow Point Partners 08/11
SSgA Emerging Markets (SEMSX) Brad Aham, but just until Christmas Co-manager Chris Laine will manage the fund during Brad’s leave of absence. 09/11
T. Rowe Price Africa & Middle East (TRAMX) Joseph Rohm, who left suddenly for South Africa Chris Alderson. 07/11
T. Rowe Price Retirement funds Ned Notzon, long-time lead of Price’s allocation funds, steps down as “co-chairman” of these funds ahead of his year-end retirement. Jerome Clark became the “sole chairman” of the fund on 8/1/11 07/11
TIAA-CREF Bond (TIBDX). Elizabeth Black and Steven Sterman John Cerra remains and is joined by Steven Raab and Joseph Higgins 08/11
TIAA-CREF Enhanced International Equity Index (TFIIX). Ping Wang goes Current co-managers Steve Rossiello and Pablo Mitchell will soldier on without him. 06/11
TIAA-CREF Enhanced Large-Cap Growth Index (TLIIX) Ruxiang Qian Comanager Kevin Zhang goes solo. 06/11
Vice Fund (VICEX) Jeffrey Middleswart Gerry Sullivan, who also manages the quant Industry Leaders fund (ILFIX). GS becomes the fund’s 7th manager in nine years. 07/11
Virtus Multi-Sector Fixed Income (NAMFX) Goodwin Capital Advisers The other subadvisor, Newfleet Asset Management, will take sole control. 06/11
Wasatch Global Opportunities (WAGOX) Robert Gardiner and Blake Walker. Gardiner also runs three small cap funds for Wasatch but his official bio lists this as “his true passion.” Oops. JB Taylor, who manages Wasatch Core Growth, joins Roger Edgely 05/11
Wasatch International Opportunities (WAIOX) Blake Walker Laura Geritz, who runs Wasatch Emerging Markets Small Cap, joins Roger Edgeley 05/11
Wells Fargo Advantage C&B Mid Cap Value (CBMAX) Kermit Eck will leave on Dec. 31, 2011 The rest of the management team remains in place 09/11
Wells Fargo Advantage Intrinsic Small Cap Value (WFSMX) Jeffrey Peck is gone… And apparently didn’t need to be replaced. Given the fund’s long-term weakness, the absence of a new manager suggests either that Wells Fargo is resigned or that they think Mr. Peck was the problem. Owie. 06/11
Wells Fargo Advantage Small Cap Growth (MNSCX) Jerome Philpott and Stuart Roberts Joseph Eberhardy, Thomas Ognar, and Bruce Olson 04/11
Wells Fargo Advantage Small Cap Value (SSMVX) No one, but . . . Erik Astheimer and Michael Schneider were added as co-managers. 09/11
Wells Fargo Advantage Strategic Large Cap Growth (ESGAX) Shannon Reid, David Chow, and Jay Zelko Tom Ognar. I’ve always been fascinated with Ognar’s name. Sounds like a Norse hero. Managed Strong Growth for years, but should have managed one of the old PrinCor funds. You can see him stalking into the feasting hall now and announcing, “I am Ognar of Princor.” 08/11
Winslow Green Growth (WGGFX) Jack Robinson Karina Funk, Elizabeth Levy, and David Powell 09/11

Manager changes, October 2011

By Editor

Because bond fund managers, traditionally, had made relatively modest impacts of their funds’ absolute returns, Manager Changes typically highlights changes in equity and hybrid funds.

Fund Out with the old In with the new Dt
BlackRock Total Return (MAHQX) No one, but . . . Bob Miller joins the fund’s three existing managers. 10/11
Davis Opportunity(RPEAX) No one, but . . . F. Jack Liebau is now listed as manager. 10/11
DWS Latin America Equity (SLANX) Florian Tanzer leaves as co-manager. Robert Kalin joins existing manager, Rainer Vermehren. 10/11
Fairholme (FAIRX) Charlie Fernandez, Bruce’s cousin-in-law Bruce Berkowitz. 10/11
Fairholme Allocation (FAAFX) Charlie Fernandez, Bruce’s neighbor Bruce Berkowitz. 10/11
Fairholme Focused Income (FOCIX) Charlie Fernandez, Bruce’s president Bruce Berkowitz. 10/11
Fidelity Equity-Income (FEQIX) Stephen Petersen: 18 years, $8 billion and it was still a closeted index A three-manager team of James Morrow, Adam Kramer, and Ramona Persaud, with Morrow as lead 10/11
Fidelity Equity-Income II (FEQTX) Stephen Petersen: $4 billion and 2.5 years, same outcome Scott Offen 10/11
Fidelity International Small Cap (FISMX) Noriko Takahashi Nicholas Price, manager of Fido Japan Smaller Companies, will handle the fund’s investments in Japan. 10/11
Goldman Sachs Capital Growth (GSCGX), Concentrated Growth, Flexible Cap Growth and Strategic Growth Fund David Shell is retiring at the end of the year, after managing $21 billion poorly Current portfolio managers from the GSAM growth team. 10/11
Goldman Sachs Capital Growth (GSCGX) Kumar Venkateswaran Current portfolio managers from the GSAM growth team. 10/11
Invesco Global Equity (GTNDX) Ralph Coutant Michael Abata joins the existing management team. 10/11
Invesco Structured Core(SCAUX) Ralph Coutant Michael Abata joins the existing management team. 10/11
Mainstay Global High Income (MGHAX) Howard Booth leaves as co-manager. New co-manager Jakob Bak joins the fund’s three remaining managers. 10/11
MassMutual Premiere Diversified Bond (MDVAX) Jill Fields left as co-manager. Sean Feeley, a member of subadvisor Babson Capital’s high-yield team, was named as a new co-manager. 10/11
Old Mutual Barrow Hanley Value(OAFOX) No one, but . . . Current manager, James Barrow, is joined by co-managers Robert Chambers, Timothy Culler, Mark Giambrone, and J. Ray Nixon Jr. 10/11
Old Mutual Large Cap Growth (OLGBX) Bradley Fretz leaves as co-manager. The rest of the management team remains in place 10/11
Steward Select Bond (SEAKX) Howard Potter leaves as co-manager. Edward Jaroski will join as co-manager with Claude Cody 10/11
T. Rowe Price Africa & Middle East (TRAMX) Chris Alderson, who was temporarily managing after the abrupt departure of Joseph Rohm, mid-2011. Oliver Bell, formerly of Pictet Asset Management 10/11