(PUB) Investing 2015

14

Fund News

Fund Manager Changes

Buffalo Small Cap BUFSX Date: 07-20-15 Kent Gasaway stepped down for health reasons. Comanagers Bob Male and Jamie Cuellar remain at the fund. | Our Take: Gasaway has been a leader at Buffalo, so his departure stings. In addition, it comes as the fund is mired in a slump and nearly half the fund’s assets have gone out the door this year. The combination of these three factors leads us to lower the fund’s rating 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 ˆ . 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. Impact: Negative Date: 07-01-15 Richard Gao has stepped down from his roles as the lead manager on Matthews China and as a comanager on Matthews Pacific Tiger. Comanager Andrew Mattock will take over on Matthews China, and Sharat Shroff will remain lead manager on Matthews Pacific Tiger. | Our Take: We have placed both funds Ø . It looks like a much bigger blow to Matthews China. Mattock is a seasoned investor, but he only joined Matthews this year. Shroff is an established and proven skipper at Matthews Pacific Tiger, and he, like Mattock, has an exceptional support team. Date: 06-01-15 Jeff Rottinghaus took over for Thomas Huber. Huber remains at T. Rowe Price Dividend Growth PRDGX. | Our Take: Huber has done a fine job here and at T. Rowe Price Dividend Growth, but Rottinghaus has a solid five-year record at T. Rowe Price U.S. Large-Cap Core TRULX. There, he has produced five-year returns of 17.3% annualized versus 17.04% for the S&P 500 and 16.45% for the large-blend category. However, that fund has only $116 million in assets, so Rottinghaus now has more on his plate with this $1.5 billion fund. Impact: Negative Date: 06-01-15 Veteran manager Larry Keele stepped down and was 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: 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. Date: 08-10-15 Susan Schmidt was named manager, replacing Ragen Stienke whose "employment has been terminated," according to Westwood. Schmidt has 20 years' industry experience, including six years running the Mesirow Financial SMid Cap Value strategy. Schmidt joins comanagers Grant Taber, Thomas Lieu, and Prashant Inamdar at the fund. The 3-star fund had been a mediocre performer for the past five years, though it enjoyed a strong run of relative performance from 2006–08. | Our Take: Schmidt is experienced, though we don’t have a mutual fund track record. The change seems a minor negative given Stienke’s middling record. Impact: Negative Columbia Acorn ACRNX Impact: Negative Date: 05-01-15 Matthews China MCHFX and Matthews Pacific Tiger MAPTX T. Rowe Price Growth & Income PRGIX Impact: Neutral Vanguard Convertible Securities VCVSX Weitz Value WVALX Westwood SMidCap WHGMX Impact: Negative

Matthews Pacific Tiger Reopens Matthews Pacific Tiger MAPTX reopened to new investors in August. The fund, with a Morningstar Analyst Rating of Gold, had experienced outflows of $217 million in July though it had net inflows of $400 million for the year to date. Strange Pricing for ETFs Ben Johnson, director of global ETF research for Morningstar, shared his take on the wild behavior of some exchange-traded funds on Monday Aug. 24 : “What we saw during the first hour or so of trading on Monday was near-total chaos, and that was expressed and manifest in the disconnect we saw between the prices of certain ETF s and their underlying net asset value. So, there was some disconnect between ETF prices and the actual underlying value of the securities they own. “There are two notable cases. The Guggenheim Equal Weight S&P 500 ETF RSP and PowerShares S&P 500 Low Volatility ETF SPLV traded at extreme dislo- cation with declines in excess of 30% or more during that first hour of trading. “Later, they came back into line. They traded at or near their net asset values for the remainder of the trading day, but this had sort of many investors scratching their heads and wondering, ’What am I to do?’ and certainly, the best answer was to do absolutely nothing, to sit tight and to ride out the volatility. But again as we saw in the case of the flash crash, there were certain orders that were filled at these prices, and there were investors that may ultimately experi- ence some real losses as a result of having sold during this very chaotic first hour of trading. “The root cause of these disconnects of these trading anomalies is still somewhat uncertain. I think that uncertainty—actually that we saw during the first hour of trading—that chaos, that panic—was