(PUB) Investing 2015

June 2015

Morningstar FundInvestor

15

month after Gross’ departure. There are no signs that flows have had an impact on performance. The fund has large sums in very liquid securities, which enables management to handle outflows effectively. Wells Fargo to Streamline Share Classes The board of the Wells Fargo Advantage Funds announced that it will convert all of the mostly higher-priced Investor share classes of its funds to lower-cost A shares. The move is a positive one for investors. Eliminating 46 funds’ Investor share classes will lower fund- holder costs by 1 – 6 basis points, depending on the fund. While the Wells Fargo Advantage funds’ expense ratios have been average overall, fully one third of the firm’s share classes—including the Investor share classes of many funds—have Morningstar Fee Levels of Above Average or High. According to Morningstar data, 11 . 7% of all of Wells Fargo Advantage funds’ assets currently are housed in Investor share classes. For example, Wells Fargo Advantage Discovery WFDAX , which has a Morningstar Analyst Rating of Bronze, charges 1 . 22% for its A shares, garnering a Below Average fee level. The Investor class shares of the same fund, meanwhile, cost 1 . 28% , which is high enough for the price tag to be classified as Above Average. Elsewhere, the A shares of Silver-rated Wells Fargo Advantage Municipal Bond WMFAX cost 0 . 76% and rank as Below Average, while that fund’s Investor shares cost just 3 basis points more but have a High fee level. The share-class conversion is scheduled to take place in late October. T. Rowe CEO to Step Down T. Rowe Price CEO , president, and chair of the firm’s management committee James A.C. Kennedy will step down from those roles as of Dec. 31 , 2015 . Kennedy, 61 , will officially retire from the firm in April 2016 after a 38 -year career at T. Rowe. William Stromberg, currently head of global equity and global equity research, will succeed Kennedy.

Stromberg, 55 , is a logical successor. Like Kennedy, he’s had a long career at T. Rowe Price and came up through the investment division, starting as an equity analyst in 1987 . He managed T. Rowe Price Dividend Growth PRDGX from the end of 1992 through March 2000 and later served as director of equity research, director of global equity research, director of equity, and finally head of global equity in 2009 . Stromberg joined T. Rowe’s management committee in 2007 , the same year that Kennedy was named CEO and president. Stromberg’s time on the management committee, which oversees the firm’s strategic direction, makes him well-suited for the CEO role, as he’s been involved in high-level company decisions for several years. It’s also encouraging that someone with investing roots is in the CEO role, which should help the firm carry forward its long-standing tradition of looking out for investors’ interests. One of his challenges will be slowing the rate of unexpected portfolio manager departures, which have occurred at a greater pace during the past two years than is typical for the firm. The firm announced a few other management changes. Eric Veiel will become head of U.S. equity and will join the management committee as of Jan. 1 , 2016 , a role previously held by John Linehan, who’s preparing to become manager of T. Rowe Price Equity Income PRFDX later this year. Veiel has been at T. Rowe for 10 years and has held various roles, including analyst, manager of T. Rowe Price Financial Services PRISX , and most recently director of equity research North America. Technology analyst Tom Watson will fill Veiel’s role as director of equity research North America, joining Jason Polun. Despite the changes, it should be business as usual at T. Rowe Price. The firm has historically handled leadership transitions well, and the board had been discussing Kennedy’s successor for 18 months. Meanwhile, the management committee remains long-tenured. K