(PUB) Investing 2016

14

Fund News

Fund Manager Changes

AMG Yacktman Focused YAFFX and AMG Yacktman YACKX Date: 05/01/2016 Founder Don Yacktman stepped down officially as manager on the fund. Stephen Yacktman and Jason Subotky remain as managers. Our Take: Don Yacktman has been dialing back his work on the fund for a number of years, so this was not a surprise and our ratings already reflected the fact that Stephen Yacktman and Subotky were the driving forces at the funds. The funds retain their respective • and Œ ratings. Date: 05/02/2016 Lead manager Jamie Pagliocco stepped down from the firm’s muni funds to take a position heading the firm’s fixed-income trading group. Comanagers Mark Sommer and Kevin Ramundo, who have managed muni funds at the firm since 2002 and 2010, respectively, were named managers on the firm’s entire suite of muni funds. Joining the duo as a new portfolio manager is Cormac Cullen, a senior member of the firm’s muni research team. Our Take: We have faith in the seasoned team that Pagliocco leaves behind and are encouraged that past transitions in Fidelity’s muni group have been quite smooth. We are maintaining our Œ rating on the fund. Impact: Negative Date: 2017 MFS announced that longtime lead manager David Mannheim will retire in one to two years. Ryan McAllister will join the fund as a comanager in September 2016. Roger Morley, who has been a comanager since 2009, will remain on board. Our Take: Mannheim has done a great job and will be missed. While Morley is a seasoned MFS veteran who has a successful record running a fund on his own, McAllister doesn’t have as much experience, though he has been at the firm since 2007. Also, Morley and McAllister will continue to draw on the work of a strong group of analysts. We still have faith in the fund but have cut our rating one notch to • . Impact: Negative Date: 03/23/2016 Bob Goldfarb stepped down as comanager in the wake of the implosion of top holding Valeant Pharmaceuticals VRX. Sequoia explained that decision-making was too centralized and didn’t give enough room for analyst input. Our Take: Goldfarb achieved a lot for investors even though he may be best remembered for the Valeant mess. Moreover, the latest bad news on Valeant makes it clear that Sequoia’s thesis was wrong—up until this point we didn’t know if Valeant’s problems were small or large. We have lowered our rating to ´ from Gold. Impact: Negative Date: 07/01/2016 Manager Taymour Tamaddon is moving to run T. Rowe Price Institutional Large Cap Growth TRLGX. Ziad Bakri will take his place on July 1, 2016. Bakri has been a healthcare analyst with the firm since 2011. He is an M.D. and had previously worked as a biotech analyst for Cowen and Co. Our Take: This is a challenge for T. Rowe because it follows the loss of a manager and two healthcare analysts in 2014. The firm says it plans to hire additional analysts. This is Bakri’s first time serving as a portfolio manager. Impact: Negative Date: 10/01/2016 Greg McCrickard is set to retire in October. He will be replaced by Frank Alonso, who has been an associate portfolio manager on the fund since 2013. Alonso has been with T. Rowe Price since 2000. Our Take: We don’t have much of a track record to go by for Alonso, so it’s a big drop from the proven McCrickard. We lowered our rating to ˇ from Silver. Virtus Foreign Opportunities JVIAX Former Morningstar Fund Manager of the Year winner Rajiv Jain is leaving subadvisor Vontobel to set up his own firm. Matthew Benkendorf, who has been at Vontobel for 17 years, is taking over. Benkendorf signed a 10-year contract when Jain resigned, so we can at least be sure that he won’t be following Jain. We don’t yet know if any of the team’s analysts will leave. Our Take: Losing Jain is a big blow, though Benkendorf is experienced and a fair amount of the team will most likely remain in place. We lowered ratings for both funds to ´ from Silver. Impact: Neutral Fidelity Municipal Income FHIGX Impact: Neutral MFS Global Equity MWEFX Sequoia SEQUX T. Rowe Price Health Sciences PRHSX T. Rowe Price Small-Cap Stock OTCFX Virtus Emerging Markets Opportunities HEMZX Impact: Negative Date: 05/31/2016

FMI Funds Reopen FMI reopened FMI Large Cap FMIHX and FMI Common Stock FMIMX on June 30 . The funds have Morningstar Analyst Ratings of Gold. Brexit Throws Funds for a Loss Markets sold off sharply in reaction to Britain’s Euro- pean Union referendum, but they rebounded at the end of June. All told, the damage wasn’t that severe from a year-to-date perspective. For the biggest core Morningstar Categories, things are not that bad. U.S. large-blend funds are up 2 . 1% on average for the year to date, intermediate-bond funds are up a robust 4 . 9% , U.S. allocation 50% to 70% equity funds are up 3% , and U.S. large-value funds are up 4% . Plain old diversification into bonds and equities has worked pretty well this time out.

To be sure, some areas are feeling more pain. Here are the top- and bottom-performing categories:

Inflows

Total Ret YTD %

Equity Precious Metals

95.47

Latin America Stock

26.19

Commodities Precious Metals

25.52

Utilities

19.67

Energy Limited Partnership

15.97

China Region

-4.06

Financial

-5.20

Europe Stock

-5.35

Bear Market

-6.60

Health

-9.43

Europe Stock

-11.70

Healthcare

-14.60

Data through June 30, 2016.

Down markets can create buying opportunities. Even- tually the 2008 – 09 bear market made stocks so cheap that they were a great buy. But we didn’t get there in a day. Given the possible harm to the global economy, I don’t know that the markets have overreacted. So, I’m not doing anything to my portfolio other than