(PUB) Morningstar FundInvestor

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Fund News

Fund Manager Changes

Aberdeen Select International Equity BJBIX and Aberdeen Select International Equity II JETAX

Impact: Neutral 05-31-13

Sell-Off Spooks Fund Investors The spike in interest rates has spurred big outflows in June. Our weekly flow data for the third week in June shows $ 9 . 0 billion in taxable-bond fund redemp- tions, $ 5 . 0 billion in muni redemptions, $ 4 . 1 billion in U.S. equity redemptions, and $ 2 . 3 billion in foreign- equity outflows. We haven’t seen this level of outflows since 2008 . It indicates that some investors were caught off-guard, despite years of warnings that interest rates would back up. Weekly flow data is a rough estimate, how- ever, and it may not signal a long-running sell-off. A second caveat is that fund flows don’t usually drive the markets. They are more of a lagging indicator. For taxable bonds and equities, it’s just a drop in the bucket. Sustained muni redemptions could have a brief impact on the market as individual investors play a big role there. We saw this in 2011 when an incorrect prediction of a muni meltdown led to outflows and a sell-off, but the muni market snapped back to rally soon after. Arrowpoint Buying Meridian Funds Arrowpoint is buying the firm that runs the Meridian funds. This is intriguing, as Arrowpoint recently hired Chad Meade and Brian Schaub away from Janus Triton JATTX . Meridian Growth MERDX manager Rick Aster died last year, leaving a void on the growth side. Arrowpoint is a manager of hedge funds founded by ex-Janus managers. So it’s a possible scenario that Meade and Schaub take that fund over and the existing Meridian team is kept to run the value fund. Brandywine Manager Buyout Friess Associates, the advisor for the Brandywine funds, announced that its employees are buying back a majority ownership stake in the firm from Affili- ated Managers Group AMG . The funds have had

The former Artio funds joined the Aberdeen lineup and are now run by the team in charge of 4-star Aber- deen International Equity GIGAX. | Our Take: These funds have new managers and a new strategy, so their past records really have no meaning. Past management had been successful until 2008 but had suffered a slump since then that led to huge outflows and staff cuts. Now the fund is in the hands of the much more successful and stable Aberdeen team. So this isn’t the fund you bought, but the change may prove to be for the best given the state of decline at Artio. Impact: Negative 05-31-13 Grant Sarris, one of three comanagers on the fund, has left. Veterans Kent Gasaway and Robert Male remain as comanagers. | Our Take: While Sarris’ departure is a loss, he had the shortest tenure at the firm of the three comanagers. Thus, we will maintain our Bronze rating on the fund. Still, we’ll watch closely for additional departures. Impact: Neutral 05-01-13 Comanager Ben Andrews is stepping back to work as an analyst serving this fund. Rob Chalupnik, who has been a comanager since 2011, is now the lead manager. Andrews’ 25% share of the fund will go to the analysts serving the fund. All told, the analysts now run 80% of the fund. | Our Take: The fund has been a mediocre performer under Andrews, and it sounds like he felt he wasn’t serving the fund well as manager. So on the one hand, it’s good news that he’s finding a better fit. On the other, we have a lead manager with a short tenure, and the analysts responsible for the unimpressive record remain in charge of most of the assets. We are maintaining our Neutral rating. Impact: Neutral 05-21-13 Harbor has replaced manager James Gendelman and Marsico Capital with Gerard Callahan, Iain Campbell, Joseph Faraday, and Paul Faulkner of Baillie Gifford, a firm that subadvises portions of two Vanguard funds. | Our Take: Harbor rarely makes subadvisor changes, but it’s understandable as performance has long lagged and Marsico has seen some managers and analysts leave. We don’t see Baillie Gifford as a big upgrade, but it does at least seem to be more stable. We are dropping the fund from coverage. Impact: Negative 10-01-13 Dan Martino will transition off this fund at the end of September. Analyst Paul Greene has been promoted to comanager until he takes over on Oct. 1. | Our Take: We hate to see Martino go but recognize that the fund has weathered past departures well thanks to the depth of the analyst team. Greene has been an analyst at T. Rowe since 2006. We’ve lowered our rating to Bronze from Silver. While we think the fund is likely to continue to outperform, it is not a destination but a stepping stone for new portfolio managers toward a diversified growth fund. Impact: Negative 05-10-13 Joe Milano has unexpectedly left T. Rowe Price, and it has promoted Dan Martino from T. Rowe Price Media & Telecommunications PRMTX to take his place. | Our Take: What a blow. We’ve lowered the rating to Neutral from Gold. You don’t often see surprise changes at T. Rowe; normally a new manager has a transition period. What’s more, while past Media & Telecom managers have moved on to diversified funds, results have been mixed. The good news is that Martino did a fine job at his previous fund, so there may yet be hope for this one. Buffalo Mid Cap BUFMX Columbia Acorn Select ACTWX Harbor International Growth HIIGX T. Rowe Price Media & Telecommunications PRMTX T. Rowe Price New America Growth PRWAX