(PUB) Investing 2016

14

Fund News

Fund Manager Changes

Fidelity Small Cap Discovery FSCRX Date: 03/14/2016 Chuck Myers will take a six-month leave of absence. Derek Jansen will fill in while he is gone. Jansen runs Fidelity Small Cap Value FCPVX, where he worked with Myers before replacing him there. Our Take: For a low-turnover fund, we don’t see much risk in Myers taking six months off. We will watch closely, though, to be sure he comes back on time. Usually managers come back after leaves of absence and pick up right where they left off, but occasionally they decide not to come back. Impact: Negative Date: 03/31/2016 Gibson Smith is leaving Janus. Comanager Darrell Waters will take over as lead manager. Our Take: We have downgraded the funds to ˇ as this is a big blow to two formerly appealing funds. Smith built up Janus’ bond effort over the past 12 years and was vital to the team. Impact: Negative Date: 09/30/2016 Lead manager Jerry Senser will retire at the end of September 2016. The firm named Tom Cole co-chief investment officer and said Matthew Swanson will step down to focus on U.S. strategies. Our Take: Senser has led ICAP since Rob Lyons’ death in 2007. We’ve lowered our rating to ˇ from ´ . 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: 04/01/2016 Dan Martino will be stepping down as portfolio manager in order to join T. Rowe’s value team. Justin White will take over T. Rowe Price New America Growth. White has been an analyst at T. Rowe Price since 2008, covering cable and satellite television, Internet infrastructure, and telecom. Our Take: It’s a surprising move, as Martino had been managing the fund only since May 2013. You don’t often see managers go from the growth side to the value side. We have placed our Morningstar Analyst Rating for T. Rowe Price New America Growth Ø . Impact: Negative Date: 12/31/2016 Wendy Trevisani gave up her comanager duties on the fund in April 2014 and left the firm in early 2015. Bill Fries will give up his comanager position on this fund at the end of 2016. Lei Wang is staying put, and he now has 10 years of experience as a comanager here as well as two decades of investment experience overall. Di Zhou, who became a comanager on this fund on Dec. 8, 2015, has spent 13 years in the investment field, including 14 months as an associate manager here. Our Take: Two thirds of the three-person team that owns this fund’s long-term record will be gone at the end of 2016, so we have lowered our Morningstar Analyst Rating to Neutral. Impact: Negative Date: 06/01/2016 Lead manager Karl Bandtel of Wellington Management will retire. Vanguard named Greg LeBlanc, also of Wellington, comanager of the fund and said he will become the lead manager when Bandtel retires. Our Take: Bandtel has a strong track record, so he will be missed. The fund is Ø . Impact: Negative Date: 01/01/2016 Longtime lead manager James Barrow has retired. Comanagers Jeff Fahrenbruch and David Ganucheau have replaced him. The two have been comanagers since 2013, and eight years ago Vanguard had said they would eventually succeed Barrow. Barrow will continue to manage Vanguard Selected Value VASVX. Our Take : We knew Barrow would retire in the relatively near future, so this is not a surprise. Still, Barrow’s outstanding record makes this a real loss. His replacements are seasoned but do not have long track records of their own. We have lowered our rating to ´ from • . Impact: Neutral Janus High-Yield JAHYX and Janus Flexible Bond JAFIX MainStay ICAP International ICEUX T. Rowe Price Health Sciences PRHSX T. Rowe Price New America Growth PRWAX Thornburg International Value Vanguard Energy VGENX Vanguard Windsor II VWNFX

U.S. Domestic-Stock Fund Manager of the Year Keith A. Lee, Robert E. Hall, Kempton M. Ingersol, Damien Davis, and Andrew J. Fones Brown Capital Management Small Company BCSIX This fund’s top-percentile finish in 2015 marks a rebound from its subpar showing the prior year. The fund has hardly been a laggard, though. It has placed in the small-growth Morningstar Category’s top-quartile or better in eight of the past 10 calen- dar years, including 2008 ’s bear market as well as the rallies of 2009 , 2012 , and 2013 . Lead manager Keith Lee and fellow-longest-tenured manager Robert Hall own the entirety of that record, as does Kempton Ingersol. Lee and Hall started here in July 1992 and Ingersol at year-end 2000 . The fund’s benchmark-agnostic, bottom-up stock- picking leads it to concentrate in certain sectors, and that worked to its benefit last year. As of late 2015 , it had an 86% combined stake in healthcare and tech versus 53% for the Russell 2000 Growth Index. Treading so heavily in these two sectors also reflects the managers’ preference for firms with the poten- tial “to save lives, time, money, or headaches.” To find them, the managers look for companies with good business models and annual operating revenue of $250 million or less. Picks that work out can reward the fund’s shareholders for decades. For example, top- 10 holding Incyte INCY gained 48% in 2015 thanks largely to a promising rheumatoid arthritis drug currently in its drug pipeline. U.S. International-Stock Fund Manager of the Year Robert Lovelace and Team American Funds New Perspective ANWPX This world-stock fund is run by seven named managers located in the United States, the United Kingdom, and Asia, each running a sleeve of the portfolio inde- pendently. Two come from Capital Group subsidiary Capital International Investors, while the others work for another subsidiary, Capital World Investors. The