(PUB) Morningstar FundInvestor

December 2013

Morningstar FundInvestor

15

Meantime, Calamos has a doozy. It expects a capital gains payout of about 25% at Calamos Growth CVGRX , where big outflows have forced a big payout. Vanguard’s Auwaerter to Retire Vanguard’s Bob Auwaerter is retiring from his post as the head of its fixed-income group in March 2014 . Auwaerter, 58 , has a long history of directly managing investor assets to good effect in earlier years, and he was instrumental in starting and building the firm’s fixed-income group, according to CEO Bill McNabb. Gregory Davis is slated to take over Auwaerter’s responsibilities, following what has turned out to be a relatively brief stint as the firm’s CIO for the Asia- Pacific region. Davis, 43 , has overseen some $ 64 billion in that capacity but has also been responsible for $ 240 billion in assets managed by Vanguard’s bond index group. Davis has been with Vanguard since 1999 . St. Joe a Disappointment for Fairholme It’s been a great year for Fairholme Fund FAIRX , which is up about 36% this year. However, there was disappointing news from one holding. St. Joe JOE announced an asset sale at relatively low prices, thus vindicating one short-seller and giving Bruce Berkowitz a little bit of bitter to go with the sweet. Fairholme Joins Offer for Fannie and Freddie The government rejected an offer from Fairholme Capital Management to buy parts of mortgage giants Fannie Mae and Freddie Mac from the government. The parts of the two government-sponsored enter- prises that Fairholme hopes to buy are the portions that insure mortgage-backed securities from Fannie and Freddie. Berkowitz announced that his proposal would answer “the bipartisan call for significantly more private capital in the mortgage market.” Under his proposal, Fairholme would lead a group of investors in bringing about $ 52 billion of private capital to support credit risk on more than $ 1 trillion worth of new mortgages. The proposal also would allow for the liquidation of

Fannie and Freddie, ending their federal charters and concluding “the unsustainable federal conservator- ship” of Fannie and Freddie. Fairholme would offer $ 34 . 6 billion in exchange for preferred stock in Fannie and Freddie owned by a group of hedge funds. Another $ 17 . 3 billion in preferred shares would be raised in a rights offering. Berkowitz has a vested interest in Fannie and Freddie, as Fairholme currently holds preferred stock with a face value of about $ 3 . 5 billion in the two govern- ment-sponsored enterprises, which the government seized control of in 2008 as they were heading toward bankruptcy. However, those preferred shares currently are trading at less than 40 cents on the dollar. Under Berkowitz’s proposal, those preferred shares would be converted to common stock at 100 cents on the dollar. Fidelity Targets Interest-Rate-Shy Investors With the launch of two new short-duration funds and the repositioning of a third, Fidelity is targeting investors fearful about the potential for rising interest rates. The first fund, Fidelity Conservative Income Muni- cipal Bond FCRDX , was launched in October with a focus on the short end of the municipal-bond yield curve, targeting a weighted average maturity of less than one year. In addition to its conservative interest-rate positioning, the fund focuses on in- vestment-grade bonds and will be limited to 10% in BBB rated fare. Slightly further out on the yield curve on the taxable side is Fidelity Advisor Limited Term Bond FDIAX . In late October, Fidelity repositioned the former Fidelity Advisor Intermediate-Term Bond with a short- term mandate and launched a new no-load share class. According to manager Rob Galusza, the fund typically will be run with a duration of less than three years and will focus on a mix of credit sectors including corporates, commercial mortgage-backed securities and asset-backed securities, as well as gov- ernment agency-backed mortgages. œ