(PUB) Investing 2016

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Fund News

Fund Manager Changes

MFS Global Equity MWEFX 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 • . Oakmark International OAKIX Rob Taylor surprised us by announcing he will retire at age 44. At Oakmark Global, David Herro will take Taylor’s spot alongside Clyde McGregor. At Oakmark International, lead manager Herro will be the sole manager, though he still has the help of senior analysts at the firm. Our Take: We are maintaining our Œ ratings on the funds as we have faith in Herro. However, the change does underline the importance of succession planning at the firm, and we’ll be watching closely as McGregor and Herro draw closer to retirement age. McGregor is 63 and Herro is 55. Impact: Negative Date: 07/10/2016 Tadd Chessen, who joined Perkins Investment Management in April 2013 as an international analyst and was named comanager of Perkins Global Value later that year, has left the firm. His departure comes just a year after comanager Christian Kirtley left to rejoin ICAP, his employer prior to Perkins. Firm CIO and lead manager Greg Kolb remains in place. Kolb has overseen this fund since 2005 when it was run out of parent company Janus; he and the fund moved to value subsidiary Perkins in 2010. Meanwhile, George Maglares, an analyst who joined Perkins in 2013, has been promoted to comanager. Our Take: Given Kolb’s history with the fund, it retains its Morningstar Analyst Rating of ´ and Positive People rating. However, we’ll be watching turnover on the investment team. Impact: Negative Date: 07/01/2016 Manager Taymour Tamaddon moved to run T. Rowe Price Institutional Large Cap Growth TRLGX. Ziad Bakri took his place on July 1, 2016. Bakri had 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. Date: 07/10/2016 Vanguard removed Peter Higgins from this fund, leaving David Palmer of Wellington as sole manager. Our Take: Higgins was responsible for the higher-risk half of the fund, so this may moderate the fund’s profile as Palmer has more of a classic value approach. We are maintaining our ˇ rating. Impact: Neutral Date: 07/10/2016 Vanguard fired subadvisor M&G Investment, which was running 12% of assets. Those assets were handed to the other two subadvisors, Baillie Gifford Overseas and Schroder Investment Management. Baillie will now manage 60% of assets and Schroder 40%. Our Take: M&G’s comanager Charles Anniss had only been on the fund since October 2014, and his predecessor was only on the fund for two years, too. It may be that turnover prompted the change, and in any case M&G wasn’t why we had a Silver rating on the fund. We are maintaining our • rating. Oakmark Global OAKGX Impact: Negative Date: 09/30/2016 Perkins Global Value JGVAX T. Rowe Price Health Sciences PRHSX T. Rowe Price Small-Cap Stock OTCFX Vanguard Capital Value VCVLX Impact: Neutral Vanguard International Growth VWIGX

Mairs & Power Fund Closing Mairs & Power Small Cap MSCFX will close to new investors on Sept. 30 , 2016 . With assets currently at $277 million, the fund still has room to grow, but capacity is key for this concentrated, low-turnover strategy. The firm has long held that the fund will close by the $500 million mark, a figure that takes into account small caps in other strategies, including Mairs & Power Growth MPGFX . (That fund is projected to close at around $5 billion.) This decision to close the fund while it is still nimble will help managers Andrew Adams and Allen Steinkopf con- tinue to implement the strong process that contrib- utes to the fund’s Morningstar Analyst Rating of Silver. CalPERS Lowers Expectations The California Public Employees’ Retirement System has lowered its return expectations to 6 . 2% . That is a sensible action in light of the low bond yields out there. It is a good reminder for the rest of us to expect modest returns in the future and make sure our plans will still work if they come to pass. T. Rowe Price Health Sciences Slightly Open T. Rowe Price Health Sciences PRHSX said it will now allow new accounts via financial intermediaries only as of Sept. 1 . The fund had previously been closed to all new investors. We rate the fund Neutral. Champlain Small Company Cuts Fees Champlain announced that Champlain Small Company CIPSX will cap its expense ratio at 1 . 20% on its retail share class. The fee cap went into effect on Sept. 1 . The move takes expenses down to about even with the small-cap no-load median of 1 . 18% . We rate the fund Silver. Vanguard Leads Flows Through July Vanguard’s open-end funds have taken in net $111 billion through July. That puts Vanguard miles ahead of the second-place asset-gatherer, DFA , which has brought in $13 billion. DoubleLine is next with a