John Roth of Fidelity New Millennium (FMILX) and Fidelity Mid-Cap Stock (FMCSX), which both have Morningstar Analyst Ratings of Bronze, will be added as a comanager of the $23 billion, Silver-rated Fidelity Advisor New Insights(FNIAX) alongside Will Danoff. The change will provide more capacity for Danoff, who also runs the $97 billion, Silver-rated Fidelity Contrafund (FCNTX). In the past, Advisor New Insights and Contrafund were run in a nearly identical fashion. With the addition of Roth, Advisor New Insights likely will include more mid-cap stocks in the future, which Roth incorporates at his other charges to a greater extent than Danoff, who's had less flexibility given the size of his asset base. The 350-stock Advisor New Insights will likely hold fewer names in the future as Danoff and Roth focus on their best ideas.
This is not the first time Fidelity has added a comanager to assist a manager who runs a substantial amount of money. In late 2012, Gopal Reddy joined Steve Wymer on Silver-rated Fidelity Advisor Growth Opportunities (FAGOX). Wymer remains the sole manager of the much bigger, Silver-rated Fidelity Growth Company (FDGRX), much like Danoff retains full responsibility for Contrafund.
Veteran Value Manager Retiring From Columbia Dividend Income
Experienced value investor Dick Dahlberg will retire at the end of 2013, relinquishing his role as a comanager of Silver-rated Columbia Dividend Income(GSFTX). Dahlberg has spent more than four decades in the investment business, holding a number of portfolio manager posts. He managed MFS Total Return (MSFRX) from 1985 to 1995, leading the fund to higher returns than the moderate-allocation category average. He later managed Pioneer Value from 1998 to 2001, outpacing large-value category peers during the relatively short stretch. Dahlberg also spent a year at GMO prior to joining Columbia in 2003.
At Columbia, Dahlberg worked alongside manager Scott Davis in leading Columbia Dividend Income to peer-besting results in the large-value category. Dahlberg and Davis have succeeded by seeking out blue-chip firms that are generating strong cash flows and are positioned to grow their dividends over time. Dahlberg's retirement will leave the fund with one fewer experienced hand, but Davis' veteran voice should smooth the transition (Davis has worked on the fund since 1998 and served as a manager since 2001). The fund will continue to benefit from the support of analyst-turned-manager Michael Barclay and convertible-securities specialist David King, who were named comanagers in 2011.
Aston/Fairpointe Mid Cap Closing to New Investors
Silver-rated Aston/Fairpointe Mid Cap(CHTTX) is closing to new investors as of Oct. 18. It will be a "soft close," so new investors still will be able to get in through financial advisors and retirement plans that have designated the fund as an option before the closing date. Thyra Zerhusen has managed the $4.7 billion fund since 1999, putting together 10- and 15-year returns that rank near the top of the mid-cap blend category. The fund's concentrated portfolio and tendency toward bold sector bets have been big reasons for its long-term success, but they also have made it rather streaky. The fund put up mediocre returns each year from 2010 through 2012, but in 2013 it has been on fire, with a 33% year-to-date gain as of Sept. 18--among the best in the category.
Those numbers attracted nearly $500 million in net inflows in the first eight months of 2013, making this the sixth-biggest fund by assets in the mid-cap blend category. The fund probably still has some capacity left given Zerhusen's very low turnover (averaging 20% a year), but Aston is being cautious by closing the fund now. The firm has a history of closing its smaller-cap funds quickly when capacity becomes an issue, and it typically consults with its subadvisors when doing so. The Silver-rated Aston/TAMRO Small Cap (ATASX) has been closed to new investors since 2009, and Bronze-rated Aston/River Road Independent Value (ARIVX) closed in January 2013 after the strategy reached its $1 billion capacity limit just two years after launching.
New Managers Named for Lord Abbett Small Cap Value
Lord Abbett announced that Tom Maher and Justin Maurer will be the new managers of Lord Abbett Small Cap Value(LRSCX) as of Oct. 1, and that the fund will reopen to new investors on the same date. They will replace Bob Fetch, who compiled a standout record as the fund's manager from 1997 to 2009 and has been running it on an interim basis since June of this year, when Lord Abbett fired previous manager Gerard Heffernan after four years of mostly middling results. Fetch is planning to retire at the end of 2013, so his taking over the fund was always understood to be temporary.
Maher and Maurer have been managing Lord Abbett Value Opportunities (LVOAX) and will continue to run that $3.0 billion fund after taking over the $3.5 billion Small Cap Value. They also will take over the much smaller Lord Abbett Micro Cap Value I (LMVYX), which Fetch also has been running since Heffernan's firing. Value Opportunities uses the same basic strategy that Fetch developed for Small Cap Value: holding high-quality stocks that are historically cheap but have a catalyst for improvement in place. The main difference is that Value Opportunities can hold mid-caps as well as small caps. Thus, it makes sense for Maher and Maurer to run both funds, though they'll now be responsible for more than twice as many assets as before. It remains to be seen whether they can return Small Cap Value to its former glory. Value Opportunities put up stellar results from 2006 through 2008, its first three years of existence, but it has been a middling performer since then, the same period when Small Cap Value has struggled. Both funds have Morningstar Analyst Ratings of Neutral.
Another Manager Departs Laudus' Large-Cap Growth Fund
Laudus Growth Investors U.S. Large Cap Growth(LGILX) has lost another key member of its management team.
This Schwab offering is subadvised by the large-cap growth group at UBS, which until November 2012 was headed by Lawrence Kemp. Kemp had an excellent 10-year record as sole manager here, and his departure to BlackRock was a blow. But Kemp had given the fund's seven analysts ample credit, and that team remained in place, with two of them promoted to comanager. Peter Bye and Sam Console were given day-to-day responsibility for the portfolio. Meanwhile, Paul Graham, who had oversight of this fund and other growth strategies at UBS since 2003, was also named comanager.
Then Console left UBS in April 2013, which was a significant loss: He had been on board since 2005, while Bye joined in 2010. On top of that, analyst Wendy Nickerson left to join Kemp at BlackRock.
Now Graham has stepped off the fund in anticipation of his retirement in January 2014. Bye does have a new comanager, Daniel Neuger, who joined UBS in September 2013. Neuger came from Pinebridge Investments, where he had been a domestic-stock manager since 2004. However, both Bye and Neuger still need to prove themselves as effective comanagers, while integrating new analysts into the team.
New Team Takes Over at Columbia Mid Cap Value Opportunity
Columbia swapped management teams at the $1.7 billion Columbia Mid Cap Value Opportunity(AMVAX). A comanager team comprising Jarl Ginsberg, Christian Stadlinger, and David Hoffman has replaced former comanagers Steve Schroll, Paul Stocking, and Dean Ramos.
The fund hadn't struggled under its previous managers. From Schroll's February 2003 start through August 2013, the fund's 13.3% annualized return beat the benchmark Russell Midcap Value's 12.3% annualized gain. Rather, Columbia notes the move was designed to allow Schroll, Stocking, and Ramos to focus their efforts on their other charge, the large-cap value Columbia Dividend Opportunity (INUTX), which also has posted strong long-term returns.
Incoming managers Stadlinger and Ginsberg have posted solid results working together at Columbia Small Cap Value II (COVAX), which they joined in 2002 and 2003, respectively. Since Stadlinger's start, the fund's 8.9% annualized gain handily beat the Russell 2000 Value Index's 7.4% annualized return through August. The third incoming manager, Hoffman, has comanaged the Neutral-rated Columbia Mid Cap Value (CMUAX) since 2004, earning mediocre--though not peer- or benchmark-leading--returns.
Manager Changes at Columbia Infrastructure Fund
The changes at Columbia's mid-cap funds continued as Columbia Recovery and Infrastructure(RRIAX) manager Warren Spitz has left the firm. The fund, which seeks to invest in undervalued infrastructure-related firms, has a mixed track record since its 2009 inception and lagged more than 70% of its mid-value peers during the three years through August 2013.
Columbia has replaced Spitz with a four-manager team, including Peter Santoro and Craig Leopold, who comanage Columbia Large Cap Core (NSGAX); Tom West, who heads the firm's equity research; and Kirk Moore, who heads the firm's fixed-income research.
Senior fund analysts David Kathman, Laura Lallos, and Katie Rushkewicz Reichart, and fund analysts Robert Goldsborough and Flynn Murphy contributed to this report.
Morningstar Fund Analysts does not own shares in any of the securities mentioned above.
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- Lord Abbett