(PUB) Investing 2016

14

Fund News

Fund Manager Changes

Fidelity Leveraged Company Stock FLVCX Date: 12/31/2016 Tom Soviero will step down at the end of the year. Mark Notkin will take Soviero’s place. Notkin runs Fidelity Capital & Income FAGIX, which has a Morningstar Analyst Rating of Silver. Our Take: Notkin has a strong record in his high-yield fund, which includes an equity sleeve. Like Soviero, he has tended to be an aggressive manager. At this fund he plans to tone down the weightings in individual stocks and tilt a bit more to growth. We have maintained our ´ rating. Impact: Negative Date: 4/1/2016 Comanager Matt Sauer left the firm in April. Comanagers Quoc Tran, James Tarkenton, and Dave Geisler remain at the fund. Our Take: It’s a disappointment to lose Sauer, who came over from Ariel. However, Tarkenton and Tran have longer track records at the fund, so it isn’t a major concern. What is a concern is the fund’s faltering track record, which led us to rate the fund ˇ . 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: 10/1/2016 Greg McCrickard retired in October. He was 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: 7/10/2016 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: 7/10/2016 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. Impact: Neutral Lateef LIMAX MFS Global Equity MWEFX Oakmark Global OAKGX Impact: Negative Date: 9/30/2016 T. Rowe Price Small-Cap Stock OTCFX Vanguard Capital Value VCVLX Impact: Neutral Vanguard International Growth VWIGX

Janus Merging With Henderson Janus Capital Group announced plans to merge with U.K.-based Henderson Group HGG , with the deal expected to close in the second quarter of 2017 . It is described as a merger of equals, with the joint company headed by co- CEO s Richard Weil (of Janus) and Andrew Formica (of Henderson). The combined firm will be called Janus Henderson Global Investors and have $322 billion of assets under management. The business rationale for the merger is clear: Both firms have been looking to diversify their product offerings and increase their distribution presence, though it’s un- clear whether that will be enough to curb the asset outflows that have plagued Janus in recent years. In addition, economies of scale should help improve financial results. The benefit to fundholders is less clear. A larger firm may attract and retain investment talent, and added scale could drive operational efficiencies and lead to lower expense ratios.Whether investors will reap such gains remains to be seen. Perkins Investment Management, which is owned by Janus, will continue operating independently as a subsidiary. We are monitoring parent-level develop- ments, but the theses on individual Janus and Perkins funds remain intact, and their Morningstar Analyst Ratings therefore remain unchanged. entire lineup available commission-free on the brokerage platforms of Fidelity and Schwab. Retail investors can now bypass a load by buying the F 1 shares of any American Funds offering. The minimum initial investment on the Fidelity platform is $2 , 500 , and on Schwab’s platform it is $100 . Although American Funds’ F 1 shares charge a 25 -basis-point 12 b- 1 fee, which goes to the respective platforms, many are still competitively priced. For example, including its 12 b- 1 American Funds Now on NTF Platforms American Funds has broadened its reach by making its