(PUB) Morningstar FundInvestor

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Morningstar FundInvestor

August 2 013

tection. We think they are less risky, and since we have a bunch of money sitting in cash today, di- versifying some of that into TIPS make sense, even though we really don’t love them at these yields.” Artisan Small Cap Closes Silver-rated Artisan Small Cap ARTSX closed to most new investors on Aug. 2 , 2013 . The $ 1 . 2 billion fund had more than $ 220 million in net inflows in the six months from October 2012 through March 2013 , according to Morningstar data. Factoring in assets in separate accounts, this small-cap strategy soaked up roughly $ 1 . 9 billion in assets as of June 2013 . Stephen Yacktman Named CIO Don Yacktman announced that his son Stephen Yack- tman had taken over as sole CIO of Yacktman Asset Management, the subadvisor for Yacktman YACKX and Yacktman Focused YAFFX . Don and Stephen had shared that title during the past seven years. Fidelity to Close Fidelity Ultra-Short Bond Fidelity will close Fidelity Ultra-Short Bond FUSFX to most new investors on Aug. 2 , 2013 . The fund suffered extremely poor performance from 2007 through 2009 , and its asset base diminished consider- ably. The fund currently holds $ 397 million in assets under management. Vanguard Suffers First Firmwide Outflow Since 1994 Investors redeemed $ 432 million from Vanguard in June, including mutual funds, exchange-traded funds, and money market funds. The outflows at Vanguard were driven by a $ 7 . 4 billion outflow from the firm’s taxable-bond funds and a $ 2 . 5 billion outflow from municipal-bond funds. Industrywide, those two cate- gory groups had outflows of $ 68 billion. Despite the outflows, the firm still managed to gain market share on the month as industry assets declined at a faster rate. While Vanguard’s flows were not un- usual given the acute reaction to the Fed’s talk of tapering its asset purchase program, the outflow was the first firmwide outflow since December 1994 . Excluding money market funds, Vanguard’s outflow was $ 5 . 5 billion, while PIMCO led all firms with a $ 14 . 3 billion outflow.

Investors Fled PIMCO Total Return, Too PIMCO Total Return PTTRX also saw outflows. Specifically, it shed about $ 10 billion in June and $ 7 billion in July. These are big figures but in percentage terms not so great given the fund’s $ 262 billion asset base. Investors have been redeeming many intermediate- bond funds and in this case they are no doubt responding to PIMCO Total Return’s poor performance this year. See Income Strategist for more on this fund. Flows Moderate in July Preliminary indications are that the big exodus from funds in June did not carry over to July. Weekly flow data in July show investors returning to equity funds and taxable-bond funds. However, flows out of municipal-bond funds remain heavy in the wake of Detroit’s bankruptcy filing. Bruce Berkowitz’s Fairholme FAIRX is suing the U.S. government for the right to receive dividends from its preferred stock in Fannie Mae and Freddie Mac. Fairholme disclosed a $ 2 . 4 billion redemption value stake in the two enterprises’ preferred stock in June. Fairholme’s June 3 statement on the stake included the claim that “equitable treatment of taxpaying share- holders, including community banks, insurance companies, and mutual funds holding Preferred Stock, must be restored with dividends reinstated.” Fairholme’s suits, which are being filed both in the U.S. Court of Claims and the U.S. District Court for the District of Columbia, allege that the government has broken from the original terms of its 2008 emer- gency investments in Fannie Mae and Freddie Mac, unlawfully hurting preferred shareholders. Berkowitz contends that the firms, now profitable and repaying the government, are also in a position to begin paying dividends on preferred stock. “As solvent, highly profitable companies, Fannie and Freddie should honor all outstanding obligations to their investors,” Berkowitz said in a July 9 news release. œ Fairholme Suing U.S. Over Fannie, Freddie Shares