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Fund name: Manning & Napier Tax-Managed
(EXTAX)
Objective: Maximize long-term growth while attempting in minimize the
impact of taxes on the total return earned by the shareholder. It invests in mid- and large-cap stocks in
the US and
elsewhere. The stock selection criteria
parallel those used at Exeter Equity: the advisor uses fundamental analysis and
looks for strong strategic profiles, improving market share, and low price
relative to its breakup value. They've used the same discipline in their
private accounts for 30 years.
Adviser: Manning & Napier Advisors, which was founded in 1970 and
manages about $11 billion for high-net-worth individuals and institutions.
Manager: A team of seven analysts who have worked at Manning and Napier
for between seven and 20 years. Three of
the seven (including two relatively new guys) have no investment in the Manning & Napier
mutual funds, the remainder have invested between $100,000 and $1,000,000 (per the fund's Statement
of Additional Information, March 1 2006).
Inception: November 1, 1995
Minimum investment: $2,000 for direct investors, $25,000 through a
financial intermediary.
Expense ratio: 1.20% after expense waiver on an asset base of $7
million; the waiver is in effect until February 2007 and is renewable. Without the waiver, expenses would have been
2.02% - remarkably low given the asset base.
Comments: In the April Annex, we profiled Manning & Napier Equity (EXEYX) as “as a
really good illustration of an interesting niche in the fund world.” The niche was institutional managers who run
a few funds as virtual “public services” to benefit their own staff or clients. As a result, these funds have
no great interest in accumulating assets, don't assess marketing fees, have
modest minimums, and much a lower expense ratio than their asset base would
otherwise suggest.
Manning & Napier Tax-Managed is cut from the same cloth. It’s a tiny fund with outsized returns,
especially when you take its tax-efficiency into account. The portfolio consists of about 60 mid- to
large-caps, about 15-20% foreign, with only a slight tilt toward growth. It has led both the S&P500 and its large
cap peer group for the trailing quarter, YTD, 1-, 3-, 5- and 10-year periods,
as well as the period since inception.
Those gains are magnified by formidable tax-efficiency: the fund has
lost less than 1% of its returns to taxes in 9 of the past 10 years and it has
lost less than 0.5% in 7 of those 10 years.
It is, nonetheless, less volatile than Exeter Equity or the S&P, and
lost less than the S&P in ’01, ’02, and during the May 2006 downturn.
Bottom line: High
returns, high tax efficiency, reasonable expenses, broad diversification,
long-tenured management and . . . uh, limited
risk of asset bloat. This seems like an
entirely plausible core holding for either a regular or tax-advantaged account.
Company link: Manning & Napier Advisors
June 1, 2006
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