(PUB) Investing 2015

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Fund News

Fund Manager Changes

AMG GW&K Core Bond MBDFX Date: 02-28-15 AMG fired PIMCO and replaced it with GW&K. It also renamed the fund from AMG Managers Total Return Bond Fund. The fund had been a near-clone of PIMCO Total Return PTTRX but will now be run by institutional money manager GW&K. Mary Kane will serve as manager. Kane has a brief two-year tenure at AMG GW&K Enhanced Core Bond MFDAX, which has performed well during her tenure. | Our Take: The fallout from Bill Gross’ departure keeps coming. GW&K has a good reputation, but we don’t cover any of its funds yet. Impact: Negative Date: 01-05-15 Kent Gasaway left the fund to focus on Buffalo Small Cap BUFSX, and Dave Carlsen replaced him as comanager. Bob Male remains as comanager. | Our Take: This is the second round of manager changes at Buffalo in recent years, and it comes amid slumping performance. In addition, Carlsen doesn’t have a long and meaningful track record. Thus, we have downgraded the fund to ˇ from Bronze. Columbia Acorn USA AUSAX Lead manager Rob Mohn plans to retire in the fourth quarter of 2015. In addition to comanager David Frank, Zach Egan and Fritz Kaegi were named comanagers of the fund to prepare for 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 wrenching changes at the funds. We have put both funds Under Review. We lowered Columbia Acorn’s Morningstar Analyst Rating to Neutral in 2014 because of concerns about redemptions and poor performance. Columbia Acorn USA had been rated Bronze. Date: 04-05-15 Comanager Jeff Kautz resigned. Kevin Preloger, who was named comanager in April 2013, remains and will be 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, the departure, coupled with the fund’s stock-picking woes, is enough to move this fund’s Morningstar Analyst Rating to ´ from Silver. Impact: Negative Date: 12-31-15 Wally Weitz is stepping down from management responsibilities here. 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. | 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 rating of • on the fund. Impact: Negative Date: 06-01-15 Veteran manager Larry Keele is stepping down and being replaced by Stuart Spangler. | Our Take: 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 ´ . Impact: Neutral Buffalo Mid Cap BUFMX Columbia Acorn ACRNX Impact: Negative Date: 05-01-15 Perkins Mid Cap Value JMCVX Impact: Negative Weitz Value WVALX Vanguard Convertible Securities VCVSX

PIMCO Bails on Some Stock Funds PIMCO is packing it in on its ambitious equity plans. Equity chief investment officer Virginie Maisonneuve is leaving the firm only a year after joining. In addition, PIMCO is liquidating three funds, including PIMCO EqS Pathfinder PTHDX , in light of poor performance and low asset levels. It was an odd effort from the start, as PIMCO chose to build its equity effort in-house. With Neel Kashkari at the helm, the firm didn’t even choose someone with equity asset management experience. PIMCO claims it isn’t throwing in the towel on equities entirely; in a statement, PIMCO CEO Douglas Hodge affirmed a commitment to stocks. In addition, for the past decade, PIMCO has worked with the firm Research Affiliates on fundamentally indexed strategies. In January, PIMCO announced plans to develop seven more equity products that will be a part of the PIMCO Fundamental Index PLUS AR group of strategies. PIMCO Total Return Having a Good 2015 Although it is still suffering outflows, PIMCO Total Return PTTRX has performed well in the first five months of 2015 . The fund is up 1 . 21% for the year to date, placing it in the top third of its category and well ahead of the Barclays U.S. Aggregate Bond Index. The fund has a big bet on the dollar versus the euro, and that has worked pretty well so far. In addition, the fund has a sizable investment in Treasury Inflation-Protected Securities, which have also performed well. Both bets reflect PIMCO ’s view that the U.S. economy is relatively strong while Japan and Europe need to keep interest rates low to boost their economies.

Meanwhile, outflows slowed to a still hefty $6 billion in April from a peak of more than $30 billion in the