(PUB) Investing 2016

3

March 2016

Morningstar FundInvestor

Fleeing in Droves: Funds With Most Outflows in Percentage Terms

its management structure, but the rebound had better come soon. We have maintained our Bronze rating on the fund. I’m worried about the $1 . 8 billion in outflows that’s cut Buffalo Small Cap BUFSX down to just $917 million. A performance slump, big outflows, and a manager change amount to some big challenges here. We lowered the fund to Neutral in September. PIMCO All Asset All Authority PAUDX should be able handle its 56% ( $8 billion) outflow quite well because it invests in other PIMCO funds. However, I mention it here because it is responsible for much of the outflows at some smaller PIMCO funds. Even there it will likely be manageable, as PIMCO has greater advance warning of redemptions and works with manager Rob Arnott to ensure a smooth withdrawal process. Artisan Value ARTLX , Artisan Mid Cap Value ARTQX , and Artisan Small Cap Value ARTVX have endured redemptions of 71% , 54% , and 53% , respectively and just before we published this issue, Artisan announced that Small Cap Value was going to merge into Mid Cap Value. The team chose Small Cap Value to merge away because it was the smallest of the three. In a different time, a fund with a strong long track record would have been kept alive. All three are good funds that are in a slump. Artisan Value has a small asset base and focuses on large caps, so no issues there. Artisan Mid Cap Value is a little more concerning, given that it had $3 . 8 billion in outflows, but the fund is closed to new investors, and I would have expected Artisan to reopen to new investors if the disruptions were significant. To be sure, though, we’re watching closely, given that we have a Silver rating on the fund. Greenspring GRSPX has suffered outflows of 49% , and that worries me. Normally, allocation funds are built to handle quite a lot of money—and outflows— because they own large-cap stocks and high-quality bonds. But Greenspring favors small-value stocks and high yield, which makes for a bit of headwind when flows are strongly against the fund. K

One-Year Growth Rate (%)

Jan 2016 Flow ($Mil)

One-Year Flow ($Mil)

Current Fund Size ($Mil)

Morningstar Analyst Rating

Total Ret % Rank Cat 5-Yr

Fund Name/Ticker

Manning & Napier Equity EXEYX

-85

-40

-804

120

90

´

Artisan Value ARTLX

-71

12

-303

882

86

´

PIMCO RAE Fundamental Adv PLUS PFSDX -67

-261

-1,541

685

62

Manning & Napier World Opp EXWAX

-67

-108

-3,207

1,391

90

´

Buffalo Small Cap BUFSX

-63

-83

-1,852

917

71

ˇ

PIMCO All Asset All Authority PAUDX

-56

-471

-8,511

8,630

88

´

Artisan Mid Cap Value ARTQX

-54

-175

-3,818

4,894

69

•

Columbia Acorn ACRNX

-53

-225

-7,691

6,069

78

ˇ

ASTON/River Road Sm Cap Value ARSVX -53

-5

-34

234

49

Artisan Small Cap Value ARTVX

-52

-15

-602

367

99

´

Dreyfus Appreciation DGAGX

-50

-68

-2,637

2,374

81

´

PIMCO Unconstrained Bond PUBDX

-50

-238

-5,134

5,468

75

ˇ

Greenspring GRSPX

-49

-12

-303

285

95

RiverPark/Wedgewood RWGFX

-48

-53

-58

1,690

58

•

Columbia Acorn USA AUSAX

-46

-189

-563

640

65

PIMCO All Asset PASDX

-45

-634

-8,356 19,868

65

Œ

Royce Premier RYPRX

-45 -1,548

-2,281

2,274

92

´

AMG Yacktman Focused Service YAFFX

-45

-187

-5,229

5,033

61

•

Royce Pennsylvania Mutual PENNX

-44

-175

-2,222

2,625

85

ˇ

Berwyn BERWX

-44

-13

-140

142

88

•

Performance data as of Feb. 29, 2016. Flow and size data as of Jan. 31, 2016.

where a performance slump and big redemptions in a bloated portfolio led us to downgrade the fund to an Analyst Rating of Neutral. Since then, though, Columbia Acorn has shaken up management to try to turn things around. Finally, an entire fund complex can be affected by redemptions at a number of funds. I’ll tackle this issue in The Contrarian on Page 10 . Manning & Napier Equity ’s EXEYX 85% outflow is remarkable even for a slumping fund. The total dollar value of outflows was a modest $800 million, however, which shouldn’t be a problem for a large-cap fund like this one, but I do have worries about the firm. Manning & Napier World Opportunities ’ EXWAX 67% outflow is a little more worrisome given that it had to sell $3 . 2 billion, but even here I’m more worried about the firm-level impact. The firm made a bad call on energy that has hurt returns across a number of its funds. It has overhauled