Monthly Archives: August 2012

August 1, 2012

By David Snowball

Dear friends,

Welcome to the Summer Break edition of the Mutual Fund Observer. I’m writing from idyllic Ephraim, Wisconsin, a beautiful little village in Door County on the shores of Green Bay. Here’s a quick visual representation of how things are going:

Thanks to Kathy Glasnap, a very talented artist who has done some beautiful watercolors of Door County, for permission to use part of one of her paintings (“All in a Row”). Whether or not you’ve (yet) visited the area, you should visit her gallery online at http://www.glasnapgallery.com/

Chip, Anya, Junior and I bestirred ourselves just long enough to get up, hit <send>, refill our glasses with sangria and settle back into a stack of beach reading and a long round of “Mutual Fund Truth or Dare.” (Don’t ask.)

In celebration of the proper activities of summer (see above), we offer an abbreviated Observer.

MFO in Other Media: David on Chuck Jaffe’s MoneyLife Radio Show

I’ll be the first to admit it: I have a face made for radio and a voice made for print. Nonetheless, I was pleased to make an appearance on Chuck Jaffe’s MoneyLife radio show (which is also available as a podcast). I spoke about three of the funds that we profiled this month, and then participated in a sort of “stump the chump” round in which I was asked to offer quick-hit opinions in response to listener questions.

Dodge & Cox Global Stock (DODWX) for Rick in York, Pa. It’s easy to dismiss DODWX if you’ve give a superficial glance at its performance. The fund cratered immediately after launch in 2008 when the managers bought financial stocks that were selling at a once-in-a-generation price only to see them fall to a once-in-a-half-century price. But those purchases set up a ferocious run in 2009. It was hurt in 2011 by an oversized emerging markets stake which paid off handsomely in the first quarter of 2012. It’s got a great management team and an entirely sensible investment discipline. It’ll be out-of-step often enough but will, in the long run, be a really good investment.

Fidelity Emerging Markets (FEMKX) for Brad in Cazenovia, NY. My bottom line was “it’s not as bad as it used to be, but there’s still no compelling reason to own it.” If you’re investing with Fido, their new Fidelity Total Emerging Markets (FTEMX) is a more much intriguing option.

Leuthold Core Investment (LCORX) for Scott in Redmond, Ore. This was the original go-anywhere fund, born of Leuthold’s sophisticated market analysis service. Quant driven, quite capable of owning pallets of lead or palladium. Brilliant for years but, like many computer-driven funds, largely hamstrung lately by the market’s irrational jerks and twitches. If you anticipate a return to a more-or-less “normal” market where returns aren’t driven by fears of the Greeks, it’s likely to resume being an awfully attractive, conservative holding.

Matthews Asia Dividend Fund (MAPIX) for Robert in Steubenville, Ohio. With Matthews Asian Growth & Income (MACSX), this fund has the best risk-return profile of any Asian-focused fund. The manager invests in strong companies with lots of free cash flow and a public commitment to their dividend. What it lacks in MACSX’s bond and convertibles holdings, it makes up for in good country selection and stock picking. If you want to invest in Asia, Matthews is the place to start.

T. Rowe Price Capital Appreciation (PRWCX) for Dennis in Strongsville, Ohio. PRWCX usually holds about 65% of the portfolio in large, domestic dividend-paying stocks and a third in other income-producing securities. Traditionally the fund held a lot of convertible securities though David Giroux, manager since 2006, has held a bit more stock and fewer converts. The fund has lost money once in a quarter century and a former manager chuckled over the recollection that Price’s internal allocation models kept coming to the same conclusion: “invest 100% in PRWCX.”

MFO in Other Media: David on “The Best Fund for the Next Six Months … and Beyond”

Early in July, John Waggoner wrote to ask for recommendations for “the remainder of 2012.” Answers from three “mutual fund experts” (I shudder) appear in John’s July 5^th column. Dan Wiener tabbed PrimeCap Odyssey Aggressive Growth (POAGX) and Jim Lowell picked Fidelity Total Emerging Markets (FTEMX). I highlighted the two most recent additions to my non-retirement portfolio:

RiverPark Short Term High Yield (RPHYX), which I described as “one of the most misunderstood funds I cover. It functions as a cash management fund for me — 3% to 4% returns with (so far) negligible volatility. Its greatest problem is its name, which suggests that it invests in short-term, high-yield bonds (which, in general, it doesn’t) or that it has the risk profile of a high-yield fund (ditto).”

David Sherman, the manager, stresses that RPHYX “is not an ATM machine.” That said, the fund returned 2.6% in the first seven months of 2012 with negligible volatility (the NAV mostly just drops with the month-end payouts). That’s led to a Sharpe ratio above 3, which is simply great. Mr. Sherman says that he thinks of it as a superior alternative to, say, laddered bonds or CDs. While in a “normal” bond market this will underperform a diversified fund with longer durations, in a volatile market it might well outperform the vast majority.

Seafarer Overseas Growth & Income (SFGIX), driven by the fact that Mr. Foster “performed brilliantly at Matthews Asian Growth & Income (MACSX), which was the least volatile (hence most profitable) Asian fund for years. With Seafarer, he’s able to sort of hedge a MACSX-like portfolio with limited exposure to non-Asian emerging markets. The strategy makes sense, and Mr. Foster has proven able to consistently execute it.”

SFGIX has substantially outperformed the average emerging-Asia, Latin America and diversified emerging markets fund in the months since its launch, though it trails MACSX. The folks on our discussion board mostly maintain a “deserves to be on the watch-list” stance, based mostly on MACSX’s continued excellence. I’m persuaded by Mr. Foster’s argument on behalf of a portfolio that’s still Asia-centered but not Asia exclusively.

Seafarer Overseas Piques Morningstar’s Interest

One of Morningstar’s most senior analysts, Gregg Wolper, examined the struggles of two funds that should be attracting more investor interest than they are, in “Two Young Funds Struggle to Get Noticed” (July 31, 2012).

One is TCW International Small Cap (TGICX) which launched in March 2011. It’s an international small-growth fund managed by Rohit Sah. Sah had “an impressive if volatile record” in seven years at Oppenheimer International Small Company (OSMAX). The problem is that Sah has a high-volatility strategy even by the standards of a high-volatility niche, which isn’t really in-tune with current investor sentiment. Its early record is mostly negative which isn’t entirely surprising. No load, $2000 investment minimum, 1.44% expense ratio.

The other is Seafarer Overseas Growth and Income (SFGIX). Wolper recognizes Mr. Foster’s “impressive record” at Matthews and his risk-conscious approach to emerging markets investing. “His fund tries to cushion the risks of emerging-markets investing by owning less-volatile, dividend-paying stocks and through other means, and in fact over the past three months it has suffered a much more moderate loss than the average diversified emerging-markets fund.” Actually, from inception through July 31 2012, Seafarer was up by 0.4% while the average emerging markets fund had lost 7.4%.

Mr. Wolper concludes that when investors’ appetite for risk returns, these will both be funds to watch:

At some point, though, certain investors will be looking for a bold fund to fill a small slot in their portfolio. Funds with modest asset bases have more flexibility than their more-popular rivals to own smaller, less-liquid stocks in less-traveled markets should they so choose. For that reason, it’s worth keeping these offerings in mind. Their managers are accomplished, and though there are caveats with each, including their cost, they feature strategies that are not easy to find at rival choices.

It’s What Makes Yahoo, Yahoo

Archaic, on the Observer’s discussion board, complained, “When I use Yahoo Finance to look at a particular fund … [its] Annual Total Return History, the history is complete through 2010 but ends there. No 2011. Anyone know why?”

The short answer is: because it’s Yahool. This is a problem that Yahoo has known about for months, but has been either unable or unmotivated to correct. Here’s their “Help” page on the problem:

I added a large arrow only because I don’t know how to add either a flashing one or an animated GIF of a guy slapping himself on the forehead. Yahoo has known about this problem for at least three months without correcting it.

Note to Marissa Mayer, Yahoo’s new CEO: Yahoo describes itself as “a company that helps consumers find what they are looking for and discover wonders they didn’t expect.” In this case, we’re looking for 2011 data and the thing we wonder about is what it says about Yahoo’s corporate culture and competence. Perhaps you might check with the folks at Morningstar for an example of how quickly and effectively a first-rate organization identifies, addresses and corrects problems like this.

Too Soon Gone: Eric Bokota and FPA International Value (FPIVX)

I had the pleasure of a long conversation with Eric Bokota at the Morningstar Investment Conference in June. I was saddened to hear that events in his private life have obliged him to resign from FPA. The FPA folks seemed both deeply saddened and hopeful that one day he’ll return. I wish him Godspeed.

Four Funds That Are Really Worth Your Time (even in summer!)

Each month the Observer provides in-depth profiles of between two and four funds. Our “Most Intriguing New Funds” are funds launched within the past couple years that most frequently feature experienced managers leading innovative newer funds. “Stars in the Shadows” are older funds that have attracted far less attention than they deserve. This month’s lineup features three newer funds and an update ING Corporate Leaders, a former “Star in the Shadows” whose ghostly charms have attracted a sudden rush of assets.

FPA International Value (FPIVX): led by Oakmark alumnus Pierre Py, FPA’s first new fund in almost 30 years has the orientation, focus, discipline and values to match FPA’s distinguished brand.

ING Corporate Leaders Trust (LEXCX): the ghost ship of the fund world sails into its 78^th year, skipperless and peerless.

RiverPark Long/Short Opportunity Fund (RLSFX): RiverPark’s successful hedge, now led by a guy who’s been getting it consistently right for almost two decades, is now available for the rest of us.

The Cook and Bynum Fund (COBYX): you think your fund is focused? Feh! You don’t know focused until you’ve met Messrs. Cook and Bynum.

The Best Small Fund Websites: Seafarer and Cook & Bynum

The folks at the Observer visit scores of fund company websites each month and it’s hard to avoid the recognition that most of them are pretty mediocre. The worst of them post as little content as possible, updated as rarely as possible, signaling the manager’s complete disdain for the needs and concerns of his (and very rarely, her) investors.

Small fund companies can’t afford such carelessness; their prime distinction from the industry’s bloated household names is their claim to a different and better relationship with their investors. If investors are going to win the struggle against the overwhelming urge to buy high and leave in a panic, they need a rich website and need to use it. If they can build a relationship of trust and understanding with their managers, they’ve got a much better chance of holding through rough stretches and profiting from rich ones.

This month, Junior and I enlisted the aid of two immensely talented web designers to help us analyze three dozen small fund websites in order to find and explain the best of them. One expert is Anya Zolotusky, designer of the Observer’s site and likely star of a series of “Most Interesting Woman in the World” sangria commercials. The other is Nina Eisenman, president of Eisenman Associates and founder of FundSites, a firm which helps small to mid-sized fund companies design distinctive and effective websites.

If you’re interested in why Seafarer and Cook & Bynum are the web’s best small company sites, and which twelve earned “honorable mention” or “best of the rest” recognition, the entrance is here!

Launch Alert: RiverNorth and Manning & Napier, P. B. and Chocolate

Two really good fund managers are combining forces. RiverNorth/Manning & Napier Dividend Income (RNMNX) launched on July 18^th. The fund is a hybrid of two highly-successful strategies: RiverNorth’s tactical allocation strategy based, in part, on closed-end fund arbitrage, and Manning & Napier’s largely-passive dividend focus strategy. Both are embedded in freestanding funds, though the RiverNorth fund is closed to new investors. There’s a lively discussion of the fund and, in particular, whether it offers any distinct value, on our discussion board. The minimum investment is $5000 and we’re likely to profile the fund in October.

Briefly Noted . . .

As a matter of ongoing disclosure about such things, I want to report several changes in my personal portfolio that touch on funds we’ve profiled or will soon profile. In my non-retirement portfolio, I sold off part of my holdings of Matthews Asian Growth and Income (MACSX) and invested the proceeds in Seafarer Overseas Growth & Income (SFGIX). As with all my non-retirement funds, I’ve established an automatic investment plan in Seafarer. In my retirement accounts, I sold my entire position in Fidelity Diversified International (FDIVX) and Canada (FICDX) and invested the proceeds in a combination of Global Balanced (FGBLX) and Total Emerging Markets (FTEMX). FDIVX has gotten too big and too index-like to justify inclusion and Canada’s new-ish manager is staggering around, and I’m hopeful that the e.m. exposure in the other two funds will be a significant driver while the fixed-income components offer some cushion. Finally, also in my retirement accounts, I sold T. Rowe Price New Era (PRENX) and portions of two other funds to buy Real Assets Fund (PRAFX). What can I say? Jeremy Grantham is very persuasive.

SMALL WINS FOR INVESTORS

A bunch of funds have tried to boost their competitiveness by cutting expenses or at least waiving a portion of them.

Cohen & Steers Dividend Value (DVFAX) will limit fund expenses to 1.00% for A shares through June 2014.

J.P. Morgan announced 9 basis point cuts for JP Morgan US Dynamic Plus (JPSAX) and JP Morgan US Large Cap Core Plus (JLCAX).

Legg Mason capped expenses on Legg Mason BW Diversified Large Cap Value (LBWAX) at between 0.85% – 1.85%, depending on share class.

Madison Investment Advisors cuts fees on Madison Mosaic Investors (MINVX) by 4 bps, Madison Mosaic Mid Cap (GTSGX) by 10, and Madison Mosaic Dividend Income (BHBFX, formerly Balanced) by 30.

Managers is dropping fees for Managers Global Income Opportunity (MGGBX), Managers Real Estate Securities (MRESX), and Managers AMG Chicago Equity Partners Balanced (MBEAX) by 11 – 16 bps.

Alger Small Cap Growth (ALSAX) and its institutional brother reopened to new investors on Aug. 1, 2012. It was once a really solid fund but it’s been sagging in recent years so your ability to get into it really does qualify as a “small win.”

CLOSINGS

Columbia Small Cap Value (CSMIX) has closed to new investors. For those interested, The Wall Street Journal publishes a complete closed fund list each month. It’s available online with the almost-poetic name, Table of Mutual Funds Closed to New Investors.

OLD WINE, NEW BOTTLES

Just as a reminder, the distinguished no-load Marketfield (MFLDX) will become the load-bearing MainStay Marketfield Fund on Oct. 5, 2012. The Observer profile of Marketfield appeared in July.

At the end of September, Lord Abbett Capital Structure (LAMAX), a billion dollar hybrid fund, will be relaunched as Lord Abbett Calibrated Dividend Growth, with a focus on dividend-paying stocks and new managers: Walter Prahl and Rick Ruvkun. No word about why.

Invesco announced it will cease using the Van Kampen name on its funds in September. By way of example, Invesco Van Kampen American Franchise “A” (VAFAX) will simply be Invesco American Franchise “A”.

Oppenheimer Funds is buying and renaming the five SteelPath funds, all of which invest in master limited partnerships and all of which have sales loads. There was a back door into the fund, which allowed investors to buy them without a load, but that’s likely to close.

OFF TO THE DUSTBIN OF HISTORY

BlackRock is merging its S&P 500 Index (MDSRX) and Index Equity (PNIEX) funds into BlackRock S&P 500 Stock (WFSPX). And no, I have no idea of what sense it made to run all three funds in the first place.

DWS Clean Technology (WRMAX) will be liquidated in October 2012.

Several MassMutual funds (Strategic Balanced, Value Equity, Core Opportunities, and Large Cap Growth) were killed-off in June 2012.

Oppenheimer is killing off their entry into the retirement-date fund universe by merging their regrettable Transition Target-Date into their regrettable static allocation hybrid funds. Oppenheimer Transition 2030 (OTHAX), 2040 (OTIAX), and 2050 (OTKAX) will merge into Active Allocation (OAAAX). The shorter time-frame Transition 2015 (OTFAX), 2020 (OTWAX), and 2025 (OTDAX) will merge into Moderate Investor (OAMIX). Transition 2010 (OTTAX) will, uhhh … transition into Conservative Investor (OACIX). The same management team oversaw or oversees the whole bunch.

Goldman Sachs took the easier way out and announced the simple liquidation of its entire Retirement Strategy lineup. The funds have already closed to new investors but Goldman hasn’t yet set a date for the liquidation. It’s devilishly difficult to compete with Fidelity, Price and Vanguard in this space – they’ve got good, low-cost products backed up by sophisticated allocation modeling. As a result they control about three-quarters of the retirement/target-date fund universe. If you start with that hurdle and add mediocre funds to the mix, as Oppenheimer and Goldman did, you’re somewhere between “corpse” and “zombie.”

Touchstone Emerging Markets Equity II (TFEMX), a perfectly respectable performer with few assets, is merging into Touchstone Emerging Markets Equity (TEMAX). Same management team, similar strategies.

In a “scraping their name off the door” move, ASTON has removed M.D. Sass Investors Services as a subadvisor to ASTON/MD Sass Enhanced Equity (AMBEX). Anchor Capital Advisors, which was the other subadvisor all along, now gets its name on the door at ASTON/Anchor Capital Enhanced Equity.

Destra seems already to have killed off Destra Next Dimension (DLGSX), a tiny global stock fund managed by Roger Ibbotson.

YieldQuest Total Return Bond (YQTRX), one of the first funds I profiled as an analyst for FundAlarm, has finally ceased operations. (P.S., it was regrettable even six years ago.)

In Closing . . .

Some small celebrations and reminders. This month the Observer passed its millionth pageview on the main site with well over two million additional pageviews on our endlessly engaging discussion board (hi, guys!). We’re hopeful of seeing our 100,000^th new reader this fall.

Speaking of the discussion board, please remember that registration for participating in the board is entirely separate from registering to receive our monthly email reminder. Signing up for board membership, a necessary safeguard against increasingly agile spambots, does not automatically get you on the email list and vice versa.

And speaking of fall, it’s back-to-school shopping time! If you’re planning to do some or all of your b-t-s shopping online, please remember to Use the Observer’s link to Amazon.com. It’s quick, painless and generates the revenue (equal to about 6% of the value of your purchases) that helps keep the Observer going. Once you click on the link, you may want to bookmark it so that your future Amazon purchases are automatically and invisibly credited to the Observer. Heck, you can even share the link with your brother-in-law.

A shopping lead for the compulsive-obsessive among you: How to Sharpen Pencils: A Practical & Theoretical Treatise on the Artisanal Craft of Pencil Sharpening for Writers, Artists, Contractors, Flange Turners, Anglesmiths, & Civil Servants (2012). The book isn’t yet on the Times’ bestseller lists, though I don’t know why.

A shopping lead for folks who thought they’d never read poems about hedge funds: Katy Lederer’s The Heaven-Sent Leaf (2008). Lederer’s an acclaimed poet who spent time working at, and poetrifying about, a New York hedge fund.

In September, we’ll begin looking at the question “do you really need to buy a dedicated ‘real assets’ fund?” T. Rowe Price has incorporated one into all of their retirement funds and Jeremy Grantham is increasingly emphatic on the matter. There’s an increasing area of fund and ETF options, including Price’s own fund which was, for years, only available to the managers of Price funds-of-funds.

We’ll look for you.

RiverPark Long/Short Opportunity Fund (RLSFX), August 2012

By David Snowball

Objective and Strategy

The fund pursues long-term capital appreciation while managing downside volatility by investing, long and short, primarily in U.S. stocks. The managers describe the goal as pursuing “above average rates of return with less volatility and less downside risk as compared to U.S. equity markets.” They normally hold 40-60 long positions in stocks with “above-average growth prospects” and 40-75 short positions in stocks representing firms with challenged business models operating in declining industries. They would typically be 50-60% net long, though their “target window” is 20-70%. They invest in stocks of all capitalizations and can invest in non-U.S. stocks but the managers do not view that as a primary focus.

Adviser

RiverPark Advisors, LLC. Executives from Baron Asset Management, including president Morty Schaja, formed RiverPark in July 2009. RiverPark oversees the six RiverPark funds, though other firms manage three of them. RiverPark Capital Management runs separate accounts and partnerships. Collectively, they have $567 million in assets under management, as of July 31, 2012.

Manager

Mitch Rubin, a Managing Partner at RiverPark and their CIO. Mr. Rubin came to investing after graduating from Harvard Law and working in the mergers and acquisitions department of a law firm and then the research department of an investment bank. The global perspective taken by the M&A people led to a fascination with investing and, eventually, the opportunity to manage several strategies at Baron Capital. Rubin also manages the RiverPark Large Cap Growth Fund and co-manages Small Cap Growth. He’s assisted by RiverPark’s CEO, Morty Schaja, and Conrad van Tienhoven, a long-time associate of his and co-manager on Small Cap Growth.

Management’s Stake in the Fund

The managers and other principals at RiverPark have invested about $4.2 million in the fund, as of July 2012. Mr. Schaja describes it as “our favorite internal fund” and object of “the greatest net investment of our own money.”

Opening date

March 30, 2012. The fund started life as a hedge fund on September 30, 2009 then converted to a mutual fund in March 2012. The hedge fund’s “investment policies, objectives, guidelines and restrictions were in all material respects equivalent to the Fund’s.”

Minimum investment

$1,000.

Expense ratio

1.75% for institutional class shares and 2.00% for retail class shares, after waivers, on assets of $46.4 million, as of July 2023.

Comments

All long-short funds have about the same goal: to provide a relatively large fraction of the stock market’s long-term gains with a relatively small fraction of its short-term volatility. They all invest long in what they believe to be the most attractively valued stocks and invest short, that is bet against, the least attractively valued ones. Many managers imagine their long portfolios as “offense” and their short portfolio as “defense.”

That’s the first place where RiverPark stands apart. Mr. Rubin intends to “always play offense.” He believes that RiverPark’s discipline will allow him to make money, “on average and over time,” on both his long and short portfolios. Most long-short managers, observing that the stock market rises more often than it falls and that a rising market boosts even bad stocks, expect to lose money in the long-term on their short positions even while the shorts offer important protection in falling markets.

How so? RiverPark started with the recognition that some industries are in terminal decline because of enduring, secular changes in society. By identifying what the most important enduring changes were, the managers thought they might have a template for identifying industries likely to rise over the coming decades and those most likely to decline. The word “decade” here is important: the managers are not trying to identify relatively short-term “macro” events (e.g., the failure of the next Eurozone bailout) that might boost or depress stocks over the next six to 18 months. Their hope is to identify factors which are going to lift up or grind down entire industries, year after year, for as far as the eye could see.

And that establishes a second distinction for RiverPark: they’re long-term investors who have been in the industry, and have been together, long enough (17 years so far) to learn patience. They’re quite willing to short a company like JCPenney even as other investors frantically bid up the share price over the arrival of a new management team, new marketing campaign or a new pricing scheme. They have reason to believe that Penney “is a struggling, sunset business attempting to adapt to . . . changes” in a dying industry (big mall-based department stores). The enthusiasm of other investors pushed Penney’s stock valuation to 40-times earnings, despite the fact that “our research with vendors, real estate professionals, and consumers has produced no evidence to indicate that any of the company’s plans were actually working. In fact, we have seen the opposite. The pricing strategy has proven to be confusing, the advertising to be ineffective, and the morale at the company to be poor.”

Finally, they know the trajectory of the firms they cover. The team started in small cap investing, later added large caps and finally long-short strategies. It means that there are firms which they researched intensively when they were in their small cap growth products, which grew into contributors in the large cap growth fund, were sold as they became mature firms with limited growth prospects, and are now shorted as they move into the sunset. This has two consequences. They have a tremendous amount of knowledge from which to draw; Mr. van Tienhoven notes that they have records of every trade they’ve made since 1997. And they have no emotional attachment to their stocks; they are, they tell me, “analysts and not advocates.” They will not overpay for stocks and they won’t hold stocks whose prospects are no longer compelling. They been known to “work on a company for 15 years that we love but that we’ve never owned” because the valuations have never been compelling. And they know that the stocks that once made them a great deal of money as longs may inevitably become candidates for shorting, which will allow them to again contribute to the fund’s shareholders.

All of which is fine in theory. The question is: can they pull it off in practice?

Our best clue comes from Mr. Rubin’s long public track record. RLSFX is his eighth fund that he’s either managed or co-managed. Of those, seven – dating back to 1995 – have met and in many cases substantially exceeded its benchmark either during his tenure or, in the case of current funds, from inception through the end of the first quarter of 2012. That includes five long-only products and two long-short funds. At the point of its conversion to a mutual fund, the RiverPark Opportunity Fund LLC was only half as volatile as the S&P 500 whether measured by maximum drawdown (that is, the greatest peak to trough fall), downmarket performance or worst quarter performance. The fund returned 14.31% from inception, barely trailing the S&P’s 14.49%. The combination of the same returns with a fraction of the volatility gave the fund an outstanding Sharpe ratio: 4.2%. He is, it’s clear, quite capable of consistently and patiently executing the strategy that he’s described.

There are a couple potential concerns which investors need to consider.

The expense ratio, even after waivers, is a daunting 3.5%. About 40% of the expenses are incurred by the fund’s short positions and so they’re beyond the manager’s immediate control.
The fund’s performance after conversion to a mutual fund is more modest than its preceding performance. The fund gained 21% in the first quarter of 2012 while still a hedge fund, smashing its peer group’s 4.8% return. In the four months since conversion, it leads its peers by a more modest 0.8%. Mr. Rubin is intensely competitive and intensely aware of his fund’s absolute and relative performance. He says that nothing about the fund’s operation changed in the transition and notes that no fund outperforms every quarter in every kind of market, but “we’ve never underperformed for very long.”

Bottom Line

Mr. Rubin is an experienced professional, working on a fund that he thinks of as the culmination of the 17 years of active management, research and refinement. Both of his long-short hedge funds offered annual returns within a few tenths of a percent of the stock market’s but did so with barely half of the volatility. Even with the drag of substantial expenses, RLSFX has earned a place on any short-list of managed volatility equity funds.

Fund website

RiverPark Long-Short /Opportunity Fund

Fact Sheet

The Cook and Bynum Fund (COBYX), August 2012

By David Snowball

Objective and Strategy

COBYX pursues the long-term growth of capital. They do that by assembling an exceedingly concentrated global stock portfolio. The stocks in the portfolio must meet four criteria.

Circle of Competence: they only invest in businesses “whose economics and future prospects” they can understand.
Business: they only invest in “wide moat” firms, those with sustainable competitive advantages.
People: they only invest when they believe the management team is highly competent and trustworthy.
Price: they only buy shares priced at a substantial discount – preferably 50% – to their estimate of the share’s true value.

Within those confines, they can invest pretty much anywhere and in any amount.

Adviser

Cook & Bynum Capital Management, LLC, an independent, employee-owned money management firm established in 2001. The firm is headquartered in Birmingham, Alabama. It manages COBYX and two other “pooled investment vehicles.” As of June 30, 2012, the adviser had approximately $220 million in assets under management.

Managers

Richard P. Cook and J. Dowe Bynum. Messrs Cook and Bynum are the principals and founding partners of Cook & Bynum (are you surprised?) and have managed the fund since its inception. They have a combined 23 years of investment management experience. Mr. Cook previously managed individual accounts for Cook & Bynum Capital Management, which also served as a subadviser to Gullane Capital Partners. Prior to that, he worked for Tudor Investment Corp. in Greenwich, CT. Mr. Bynum also managed individual accounts for Cook & Bynum. Previously, he’d worked as an equity analyst at Goldman Sachs & Co. in New York. They work alone and also manage around $140 million in two other accounts.

Management’s Stake in the Fund

As of September 30, 2011, Mr. Cook had between $100,000 and $500,000 invested in the fund, and Mr. Bynum had over $500,000 invested. Between these investments and their investments in the firm’s private accounts, they have “substantially all of our investable net worth” in the firm’s investment vehicles.

Opening date

July 1, 2009. The fund is modeled on a private accounts which the team has run since August 2001.

Minimum investment

$5,000 for regular accounts and $1,000 for IRA accounts.

Expense ratio

1.88%, after waivers, on assets of $82 million. There’s also a 2% redemption fee for shares held less than 60 days.

Comments

I can explain what Cook and Bynum do.

I can explain how they’ve done.

But I have no comfortable explanation for how they’ve done it.

Messrs. Cook and Bynum are concentrated value investors in the tradition of Buffett and Munger. They’ve been investing since before they were teens and even tried to start a mutual fund with $200,000 in seed money while they were in college. Within a few years after graduating college, they began managing money professionally. Now in their mid 30s, they’re on the verge of their first Morningstar rating which might well be five stars.

Their investment discipline seems straightforward: do what Warren would do. Focus on businesses and industries that you understand, invest only with world-class management teams, research intensely, wait for a good price, don’t over-diversify, and be willing to admit your mistakes.

They are, on face, very much like dozens of other Buffett devotees in the fund world.

Their discipline led to the construction of a very distinctive portfolio. They’ve invested in just eight stocks (as of 3/31/12) and hold about 30% in cash. There are simply no surprises in the list:

Company	Ticker	Sector	% of Total Portfolio
Wal-Mart Stores	WMT	General Merchandise Stores	19.0
Microsoft	MSFT	Software Publishers	10.8
Berkshire Hathaway	BRK/B	Diversified Companies	10.3
Arca Continental SAB	AC* MM	Soft Drink Bottling & Distribution	8.8
Coca-Cola	KO	Soft Drink Manufacturing	5.2
Procter & Gamble	PG	Household/Cosmetic Products Manufacturing	5.0
Kraft Foods	KFT	Snack Food Manufacturing	4.9
Tesco	TSCO	Supermarkets & Other Grocery Stores	4.9

American investors might be a bit unfamiliar with the fund’s two international holdings (Arca is a large Coca-Cola bottler serving Latin America and Tesco is the world’s third-largest retailer) but neither is “an undiscovered gem.” With so few stocks, there’s little diversification by sector (70% of the fund is “consumer defensive” stocks) or size (85% are mega-caps). Both are residues of bottom-up stock picking (that is, the stocks which best met C&B’s criteria were consumer-oriented multinationals) and are of no concern to the managers who remain agnostic about such external benchmarks. The fund’s turnover ratio is 25%, which is quite, if not stunningly, low.

Their performance has, however, been excellent. Kiplinger’s (11/29/2011) reported on their long-term record: “Over the past ten years through October 31, 2011, a private account the duo have managed in the same way they manage the fund returned 8.7% annualized” which beat the S&P 500 by 6.4% per year. COBYX just passed its third anniversary with a bang: its returns are in the top 1-5% of its large blend peer group for the past month, quarter, YTD, year and three years. While the mutual fund trailed the vast majority of its peers in 2010, returning 11.8% versus 14.0% for its peers, that’s both very respectable and not unusual for a cash-heavy fund in a rallying market. In 2011 the fund finished in the top 1% of its peer group and it was in the top 3% through the first seven months of 2012.

More to the point, the fund has (since inception) substantially outperformed Mr. Buffett’s Berkshire-Hathaway (BRK.A). It is well ahead of other focus Buffettesque funds such as Tilson Focus (TILFX) and FAM Value (FAMVX) and while it has returns in the neighborhood of Tilson Dividend (TILDX), Yacktman (YACKX) and Yacktman Focused (YAFFX), it’s less volatile.

Having read about everything written by or about the fund and having spoken at length with David Hobbs, Cook & Bynum’s president, I’m still not sure why they do so well. What stands out from that conversation is the insane amount of fieldwork the managers do before initiating and while monitoring a position. By way of example, the fund invested in Wal-Mart de Mexico (Walmex) from 2007-2012. Their interest began while they were investigating another firm (Soriana), whose management idolized Walmex. “We visited Walmex’s management the following week in Mexico City and were blown away … Since then we have made hundreds of store visits to Walmex’s various formats as well as to Soriana’s and to those of other competitors…” They concluded that Walmex was “perhaps the finest large company in the world” and its stock was deeply discounted. They bought. The Walmex position “significantly outperformed our most optimistic expectation over the last six years,” with the stock rising high enough that it no longer trades at an adequate discount so they sold it.

In talking with Mr. Hobbs, it seems that a comparable research push is taking place in emerging Europe. While the team suspects that the Eurozone might collapse, such macro calls don’t drive their stock selection and so they’re pursuing a number of leads within the zone. Given their belief in a focused portfolio, Hobbs concluded “if we can find two or three good ideas, it’s been a good year.”

Potential investors need to cope with three concerns. First, a 1.88% expense ratio is high and is going to be an ongoing drag on returns. Second, their incessant travel carries risks. In psychology, the problem is summed up in the adage, “seek and ye shall find, whether it’s there or not.” In acoustical engineering, it’s addressed as the “signal-to-noise ratio.” If you were to spend three weeks of your life schlepping around central Europe, perusing every mini-mart from Bratislava to Bucharest, you’d experience tremendous internal pressure to conclude that you’d gained A Great Insight from all that effort. Third, it’s not always going to work. For all their care and skill, someone will slip Stupid Pills into their coffee one morning. It happened to Donald Yacktman, a phenomenally talented guy who trailed his peers badly for three consecutive years (2004-06). It happened to Bill Nygren whose Oakmark Select (OAKLX) crushed for a decade then trailed the pack, sometimes dramatically, for five consecutive years (2003-07). Over 30 years it happens repeatedly to Marty Whitman at Third Avenue Value (TAVFX). And it happened to a bunch of once-untouchable managers (Jim Oelschlager at White Oak Growth WOGSX, Auriana and Utsch at Kaufmann KAUFX, Ron Muhlenkamp at Muhlenkamp Fund MUHLX) whose former brilliance is now largely eclipsed. The best managers stumble and recover. The best focused portfolio managers stumble harder, and recover. The best shareholders stick with them.

Bottom Line

It’s working. Cook and Bynum might well be among the best. They’re young. The fund is small and nimble. Their discipline makes great sense. It’s not magic, but it has been very, very good and offers an intriguing alternative for investors concerned by lockstep correlations and watered-down portfolios.

Fund website

The Cook & Bynum Fund. The C&B website was recently recognized as one of the two best small fund websites as part of the Observer’s “Best of the Web” feature.

FPA International Value Fund (FPIVX) – August 2012

By David Snowball

Objective and Strategy

FPA International Value tries to provide above average capital appreciation over the long term while minimizing the risk of capital losses. Their strategy is to identify high-quality companies, invest in a quite limited number of them and only when they’re selling at a substantial discount to FPA’s estimation of fair value, and then to hold on to them for the long-term. In the absence of stocks selling at compelling discounts, FPA is willing to hold a lot of cash for an extended period. They’re able to invest in both developed and developing markets, but recognize that the bulk of their exposure to the latter might be achieved indirectly through developed market firms with substantial emerging markets footprints.

Adviser

FPA, formerly First Pacific Advisors, which is located in Los Angeles. The firm is entirely owned by its management which, in a singularly cool move, bought FPA from its parent company in 2006 and became independent for the first time in its 50 year history. The firm has 25 investment professionals and 66 employees in total. Currently, FPA manages about $20 billion across four equity strategies and one fixed income strategy. Each strategy is manifested in a mutual fund and in separately managed accounts; for example, the Contrarian Value strategy is manifested in FPA Crescent (FPACX), in nine separate accounts and a half dozen hedge funds.

Managers

Pierre O. Py. Mr. Py joined FPA in September 2011. Prior to that, he was an International Research Analyst for Harris Associates, adviser to the Oakmark funds, from 2005 to 2010. At this writing (July 30 2012), Mr. Py was looking for a couple of analysts to assist in running the fund.

Management’s Stake in the Fund

Mr. Py, his former co-manager Eric Bokota and FPA’s partners are the fund’s largest investors. Mr. Bokota estimated that he and Mr. Py had invested about two to three times their annual salary in the fund. That reflects FPA’s corporate commitment to “co-investment” in which “Partners invest alongside our clients and have a majority of their investable net worth committed to the firm’s products and investments. We encourage all other members of the firm to invest similarly.”

Opening date

December 1, 2011.

Minimum investment

$1,500, reduced to $100 for IRAs or accounts with automatic investing plans

Expense ratio

1.35% on assets of $8 million

Comments

Few fund companies get it consistently right. By “right” I don’t mean “in step with current market passions” or “at the top of the charts every years.” By “right” I mean two things: they have an excellent investment discipline and they treat their shareholders with profound respect.

FPA gets it consistently right.

That alone is enough to warrant a place for FPA International Value on any reasonable investor’s due diligence list.

What are the markers of getting it right? FPA describes itself as a “absolute value investors.” They simply refuse to buy overpriced assets, preferring instead to hold cash – even at negligible yields – rather than lowering their standards. It’s not unusual for an FPA fund to hold 20 – 40% in cash, sometimes for several years. That means the funds will sometimes post disastrous relative returns – for example, flagship FPA Capital (FPTTX) has trailed 98-100% of its peers three times in the past ten years – but their refusal to buy anything at frothy prices pays off handsomely for long-term investors (FPPTX has posted top-tier results for the decade as a whole). That divergence between occasional short-term dislocations and long-term discipline leads to an interesting pattern in Morningstar ratings: while three of FPA’s four established stock funds earn just three stars (as of late July 2012), all three also earn Silver ratings which reflects the judgment of Morningstar’s analysts that these really are top-tier funds.

The fourth fund, Steve Romick’s FPA Crescent (FPACX), earns both five stars and a Gold analyst rating.

Like the other FPA funds, FPA International Value is looking to buy world-class companies at substantial discounts.

We always demand that our investments meet the following criteria:

High quality businesses with long-term staying power.
Overall financial strength and ability to weather market dislocations.
Management teams that allocate capital in a value creative manner.
Significant discount to the intrinsic value of the business.

The managers will follow a good company for years if necessary, waiting for an opportunity to purchase its stock at a price they’re willing to pay. Founding co-manager Eric Bokota said that they’d purchase if the discount to fair value was at least 33% but would begin “lightening up” on the position while the discount narrowed to 17%; that is, they buy deeply discounted stocks and begin to sell modestly discounted ones.

Mr. Bokota argues that the long-term success of the strategy rises as market volatility rises. First, the managers have been assessing possible purchase targets for years, in many cases. Part of that assessment is how corporate management handles “market dislocations.” Bokota’s argument is that short-term dislocations strengthen the best companies by giving them the opportunity to acquire less-seasoned competitors or to acquire market share from them. Second, their willingness to hold cash (around 22% of the portfolio, as of the end of July 2012) means that they have the resources to act when the time is right and an automatic cushion when the time isn’t.

Bokota holds that the fund has four competitive distinctions:

It holds stocks of all sizes, from $400 million to multinational mega-caps
It holds cash rather than lower quality or higher cost stocks
It maintains its absolute value orientation in all markets
It is unusually concentrated, with a target of 25-35 names in the portfolio. As of late July, the portfolio is just below 25 names. That’s consistent in line with Mr. Bokota’s observation that “anything north of 15 to 20 names” offers about as much diversification benefit as you’re going to get.

The fund’s early performance (top 1% of its peer group for the first seven months of 2012 with muted volatility) is entirely encouraging. That said, there are three reasons for caution:

First, the management team is still evolving. The fund launched in December 2011 with two co-managers, Eric Bokota and Pierre Py. Both were analysts at Harris/Oakmark and they shared responsibility for the portfolio. They were not supported by any research analysts, which Bokota described as a manageable arrangement because their universe of investable stocks is quite small and both he and Py loved research. In July 2012, Mr. Bokota suddenly resigned for pressing personal reasons. Py and FPA immediately began a search for two analysts, one of whom spokesman Ryan Leggio described as “a senior analyst.” Their hope was to have the matter settled by the end of the summer, but the question was open at the time of this writing.

Second, this is the manager’s first fund. While Mr. Py doubtless excelled as a member of Oakmark’s well-respected analyst corps, he has not previously been the lead guy and hasn’t had to deal with the demands of marketing and of fickle investors.

Third, FPA’s discipline lends itself to periods of dismal relative performance especially during sharply rising markets. Sadly, rising markets are when investors are most willing to check portfolios daily and most likely to dump what they perceive to be “laggards.” Investors with relatively high turnover fund portfolio (folks who “actively manage” their portfolios by trading funds in search of what’s hot) are likely to be poorly served by FPA’s steady discipline.

Bottom Line

FPA lends a fine pedigree to this fund, their first new offering in almost 20 years (they acquired Crescent in the early 1990s) and their first new fund launch in almost 30. While the FPIVX team has considerable autonomy, it’s clear that they also believe passionately in FPA’s absolute value orientation and are well-supported by their new colleagues. While FPIVX certainly will not spend every year in the top tier and will likely spend some years in the bottom one, there are few with better long-term prospects.

Fund website

FPAInternationalValue

August 2012, Funds in Registration

By David Snowball

Dreyfus ACWI Ex-U.S. Index Fund

Dreyfus ACWI Ex-U.S. Index Fund seeks to match the performance of the Morgan Stanley Capital International All Country World Ex-U.S. Index (MSCI ACWI Ex-US Index). The fund’s portfolio managers, Thomas J. Durante, Karen Q. Wong and Richard A. Brown, select portfolio investments for the fund using a “sampling” process so that the securities, market capitalizations, country and industry weightings and other fundamental benchmark characteristics of the fund’s portfolio are similar to those of the MSCI ACWI Ex-US Index as a whole. The fund may enter into futures contracts and other financial instruments to manage its short-term liquidity or as a substitute for comparable market positions in the securities included the MSCI ACWI Ex-US Index. The expense ratio has not yet been set. The minimum initial investment is $2,500 for investor shares, with a $100 minimum for subsequent investments.

Huntington Longer Duration Fixed Income Fund

Huntington Longer Duration Fixed Income Fund seeks total return from a non-diversified portfolio of longer duration fixed income instruments. They can invest in securities issued by various U.S. and non-U.S. public- or private-sector entities, though only 20% can be in non-dollar-denominated issues. They can also hedge their currency exposure. The average portfolio duration equals the Barclays Capital Long Term Government/Credit Index, plus or minus two years. Kirk Mentzer leads their management team. Expense ratio 1.08%, no redemption fee. The minimum initial purchase for the Fund’s Trust Shares is $1,000.

Icon Opportunities Fund

Icon Opportunities Fund seeks capital appreciation by investing in U.S. small cap stocks that are “underpriced relative to value” (as opposed to “overpriced relative to coffee”?). Dr Craig Callahan, Founder, President and Chairman of the Investment Committee, and Scott Callahan, are the Portfolio Managers. Expense ratio 1.50%, no redemption fee. The minimum initial investment is $1,000.

KKR Alternative High Yield Fund

KKR Alternative High Yield Fund seeks to generate an attractive total return consisting of a high level of current income and capital appreciation. The fund will invest in a portfolio of fixed-income investments, including high yield bonds, notes, debentures, convertible securities and preferred stock, with the potential for attractive risk-adjusted returns. The Adviser seeks to identify and capture discounts or premiums over purchase price in response to changes in market environments and credit events. The majority of the Fund’s investments are expected to be in fixed-income instruments issued by U.S. companies, but the Fund may, from time to time, be invested outside the United States, including investments in issuers located in emerging markets. The Fund will not invest more than 30% of its total assets in non-U.S. dollar-denominated securities or instruments issued by non-U.S. issuers that are not publicly traded in the United States. The Fund may also invest in loans and loan participations. The Fund may seek to obtain market exposure to the securities and instruments in which it invests by investing in ETFs and may invest in various types of derivatives, including swaps, futures and options, and structured products in pursuing its investment objective or for hedging purposes. The Fund is co-managed by Erik A. Falk, Frederick M. Goltz, Christopher A. Sheldon and William C. Sonneborn. Expenses and minimum initial investments have not yet been determined.

Scout Emerging Markets Fund

Scout Emerging Markets Fund seeks long-term growth by investing in emerging market stocks. For their purposes, e.m. stocks include firms domiciled in developed markets “that derive a majority of their revenue from emerging market countries” and as well those in the MSCI Frontier Markets Index. They’ll try to remain diversified by country and industry, but market events might force them to be less so. Mark G. Weber, a former Morningstar equity analyst who co-managed Scout International Discovery, leads the management team. Expense ratio 1.40%, no redemption fee. Minimum initial investment is $1000 for standard accounts and $100 for IRAs.

TIAA-CREF Social Choice Bond Fund

TIAA-CREF Social Choice Bond Fund seeks a favorable long-term total return while preserving capital and giving special consideration to certain social criteria. The Fund primarily invests in a broad range of investment-grade bonds and fixed-income securities, but may also invest in other fixed-income securities, including those of non-investment grade quality. Fund investments are subject to certain environmental, social and governance (“ESG”) screening criteria provided by a vendor of the Fund, MSCI, Inc. The ESG evaluation process generally favors corporate issuers that are: (i) strong stewards of the environment; (ii) committed to serving local communities where they operate and to human rights and philanthropy; (iii) committed to higher labor standards for their own employees and those in the supply chain; (iv) dedicated to producing high-quality and safe products; and (v) managed in an exemplary and ethical manner. Additionally, Advisors targets 10% of the Fund’s assets to be invested in fixed-income instruments that reflect proactive social investments that provide direct exposure to socially beneficial issuers and/or individual projects such as: affordable housing, community and economic development, renewable energy and climate change, and natural resources. The fund will be managed by Stephen M. Liberatore, Joseph Higgins, and Steven Raab. The expense ratio for retail class investors is 0.75%, with a minimum initial investment of $2,000 for Traditional IRA, Roth IRA and Coverdell accounts and $2,500 for all other account types. Subsequent investments for all account types must be at least $100. There is no minimum initial or subsequent investment for Retirement Class shares offered through employer-sponsored employee benefit plans, with a 0.65% expense ratio.

Vanguard Short-Term Inflation-Protected Securities Index Fund

Vanguard Short-Term Inflation-Protected Securities Index Fund seeks to track the performance of the Barclays U.S. Treasury Inflation-Protected Securities (TIPS) 0-5 Year Index. The Fund attempts to replicate the target index by investing all, or substantially all, of its assets in the securities that make up the Index, holding each security in approximately the same proportion as its weighting in the Index. The fund will be managed by Joshua C. Barrickman and Gemma Wright-Casparius. The expense ratio has not yet been set, but as a Vanguard fund can be expected to be low. The minimum initial investment is $3,000 for investor shares, with $100 minimum for subsequent investments.

Manager Changes, July 2012

By Chip

Because bond fund managers, traditionally, had made relatively modest impacts of their funds’ absolute returns, Manager Changes typically highlights changes in equity and hybrid funds.

Ticker	Fund	Out with the old	In with the new	Date
AAIEX	American Beacon International Equity	Gary Motyl passed away last month	Cindy Sweeting and Antonio Docal were named as portfolio managers	7/12
BIBDX	BlackRock Global Dividend Income	No one, but …	Andrew Wheatley-Hubbard joins the team as a comanager	7/12
BGORX	BlackRock Global Opportunities	Michael Carey is no longer manager	Nigel Hart, managing director of BlackRock, will become comanager with the existing team of Ian Jamieson and Thomas Callan.	7/12
MMCIX	BNY Mellon Small/Mid Cap	No one, but …	Alexander Budny III and Charles Trafton will be added as comanagers	7/12
CVARX	Calamos Value	No one, but …	Three new managers, Jeff Miller, Ariel Fromer, and Tammy Miller, join the team.	7/12
SLMCX	Columbia Seligman Communications & Information	No one, but …	Ajay Diwan is joining the management team of Paul Wick, Richard Parower, Vishal Saluja, and Sushil Wagle	7/12
CSMIX	Columbia Small Cap Value I	Stephen D. Barbaro will retire at the end of the year	His comanager, Jeremy H. Javidi, assumed the role of lead manager on June 30, 2012, with John Barret continuing to comanage.	7/12
CTCAX	Columbia Technology	No one, but …	Rahul Narang has joined lead manager, Wayne Collette.	7/12
CRISX	CRM Mid Cap Value	No one, but …	Robert Rewey III has joined as a comanager	7/12
CRIAX	CRM Small/Mid Cap Value	No one, but …	Jonathan Ruch has joined as a comanager	7/12
DLMAX	Delaware Mid Cap Value	No one, but …	Steven Catricks, Kelley McKee, and Kent Madden, three equity analysts, have been promoted to comanagers	7/12
DEVLX	Delaware Small Cap Value	No one, but …	Steven Catricks, Kelley McKee, and Kent Madden, three equity analysts, have been promoted to comanagers	7/12
DIGFX	Dreyfus Basic US Mortgage Securities	No one, but …	Karen Gemmett has joined as a comanager.	7/12
DIAVX	Dreyfus Inflation Adjusted Securities	No one, but …	Nate Pearson was added as a portfolio manager, joining comanagers Robert Bayston and David Horsfall	7/12
DRGIX	Dreyfus US Treasury Intermediate Term	No one, but …	Nate Pearson, a current strategist with the firm, is a new comanager, with head manager Robert Bayston.	7/12
DRGBX	Dreyfus US Treasury Long-Term	No one, but …	Nate Pearson, a current strategist with the firm, is a new comanager, with head manager Robert Bayston.	7/12
FPIVX	FPA International Value	Eric Bokota, in a surprise move, has stepped down as comanager and resigned from First Pacific Advisors.	Comanager Pierre O. Py remains as the sole manager but is looking for a senior analyst	7/12
FRBSX	Franklin Balance Sheet Investment	No one, but …	Grace Hoefig joins the management team	7/12
FRVLX	Franklin Small Cap Value	Y. Dogan Sahin	Steve B. Raineri joins a team that’s been in place since 1996	7/12
HFLAX	Hartford Floating Rate	Frank Ossino has left Wellington Management, the subadviser, and has stepped down as portfolio manager.	Comanager, Michael Bacevich, remains.	7/12
HSFAX	HSBC Frontier Markets	No one, but …	Chris Turner has joined Andrew Brudenell as a comanager	7/12
JNRAX	John Hancock Natural Resources	No one, but …	RS Investment Management becomes a second subadvisor.	7/12
EPLPX	MainStay Epoch U.S. Equity	David Pearl will no longer be manager, as part of a larger shift in strategy, as well as a name change.	Eric Sappenfield will join the management team of MainStay Epoch U.S. Equity Yield	7/12
MERGX	Marsico Emerging Markets	Joshua Rubin is among the latest group leaving.	Munish Malhotra remains as the sole portfolio manager	7/12
MFCFX	Marsico Flexible Capital	Doug Rao is the latest of many departures.	Jordan Laycob and Munish Malhotra will comanage.	7/12
MFOCX	Marsico Focus	Doug Rao is the latest of many departures.	Tom Marsico and Coralie Witter remain.	7/12
MGRIX	Marsico Growth	Doug Rao is the latest of many departures.	Tom Marsico and Coralie Witter remain.	7/12
MERDX	Meridian Growth	No one, but …	Larry Cordisco, who left Meridian Value in 2011, returns to shore up the team of William Tao and Jamie England after Rick Aster’s death early this year.	7/12
MPXCX	MFS Asia Pacific Ex Japan	Robert W. Lau will be replaced by . . .	. . . John J. Tsai and Sanjay Natarajan	7/12
OPTFX	Oppenheimer Capital Appreciation	No one, but …	Michael Kotlarz joined as comanager	7/12
OEQAX	Oppenheimer Equity	No one, but …	Michael Kotlarz joined as comanager	7/12
PIUIX	PNC International Equity	Brian Hopkinson and Paul Nestro	Bin Xiao of Polaris Capital Management joined the team	7/12
PRACX	Putnam Research Fund	George Gianarikas	Neil Desai, previously a partner at Crosslink Capital	7/12
TWAAX	Thrivent Partner Worldwide Allocation	No one, but …	DuPont Capital Management will become the sixth subadvisor. It’s a fine fund but really, six management teams for $600 million in assets?	7/12
USGNX	USAA Government Securities	Didi Weinblatt has retired	Donna Baggerly will again be lead manager.	7/12
USAIX	USAA Income	Didi Weinblatt has retired	Matt Freund and Julianne Bass will take over.	7/12
EKWAX	Wells Fargo Advantage Precious Metals	No one, but …	Oleg Makhorine joins the team.	7/12