Fund Openings, Closings, Manager Moves: Litman/Gregory Assembles Value Fund Team Roster

Litman/Gregory has assembled its value team roster for its latest offering. Its lineup for the no-load Master's Select Value, which launches on June 30, reads like a Who's Who of the mutual fund's value stars, past and present. The fund will be managed in part by Mason Hawkins of Longleaf Partners, Bill Miller of Legg Mason, Bill Nygren of Oakmark and Larry Sondike of Franklin Mutual Series.

Each of the portfolio managers has run up a solid long-term record, though some have stumbled in recent years due to the tough environment for value players. Hawkins of Longleaf, for example, ranks in the top 10% of managers for the 10-year period among mid-cap value funds, but is near the bottom for the one-year period, according to Morningstar.

The managers will each have the ability to invest up to 25% of their portion of the portfolio in small-cap stocks and another 25% in foreign companies. Ken Gregory, president of the fund adviser, says he expects the final product to have 10% to 20% in smaller companies and 10% to 15% in international companies.

Like the other Master's Select funds, the managers will each pick eight to 15 stocks, representing each managers' best ideas. The portfolio's goal is to have each of the managers outperform his peers and benchmarks.

The fund company already runs two funds that are managed by teams of portfolio managers, (MSEFX Quote)Master's Select Equity and (MSILX Quote)Master's Select International. This will be the first of its funds that focuses on a specific investment style. Litman/Gregory has another fund in the works that it plans to roll out soon, Master's Select Smaller Companies fund. That fund's launch may be delayed as Litman/Gregory searches for small-cap managers, which Gregory says has been tough. Good small-cap managers are often unable to take on many more assets for fear of diluting returns in stocks with small floats.

Tremont Advisors to Post After-Tax Returns

Looks like the campaign to post funds' after-tax returns has reached the hedge-fund world too.

Monday morning Tremont Advisors, a consulting firm that advises the well-heeled types who buy shares of hedge funds and other alternate investments, announced that they would start reporting after-tax returns for their clients.

Last year, lawmakers discussed requiring mutual-fund companies to post funds' after-tax returns to give investors an idea of how much of a fund's return they keep after paying Uncle Sam. In October, Vanguard announced plans to report after-tax returns in their stock and balanced funds' annual reports.

Tremont's move is intriguing because the largely unregulated hedge-fund business is typically low on reporting and details. Most mutual-fund companies have resisted the campaign thus far, but the preponderance of tax-managed funds out there, along with Tremont's announcement, shows that tax efficiency is a hot-button issue with investors of all sizes.

Waddell & Reed Funds Will Get Name Change

Starting next month Waddell & Reed's name will be on all its funds, and brokers will have a few more W&R funds to choose from.

On July 1, Waddell & Reed's United Group, the 17 stock and bond funds sold strictly through the firm's 2,600 brokers, will be renamed Waddell & Reed Advisors Funds. At the same time the Waddell & Reed family of funds, eight funds sold through nonaffiliated advisers, will be rechristened W&R funds.

The W&R family of funds will also get four new additions: W&R Large Cap Growth, W&R Mid Cap Growth, W&R Tax-Managed Equity and W&R Money Market. The new stock funds will essentially be clones of three United funds: (UNVGX Quote)United Vanguard, (UNECX Quote)United New Concepts and the recently launched United Tax-Managed Equity. Vanguard and New Concepts both have solid, if unremarkable, track records.

Also, (WRGCX Quote)Waddell & Reed Growth will change its name to W&R Small Cap Growth. The fund's investment strategy and management will remain the same.

Van Kampen Plans to Fold Closed-End Fund

Van Kampen aims to turn off the light on one of its closed-end funds.

The fund company is asking shareholders of the Convertible Securities fund to approve a proposal that will merge that fund offering into Van Kampen's (ACHBX Quote)Harbor fund, an open-end offering. Both funds have a similar structure.

Van Kampen says it proposed the change to remedy the consistent discount problem at Convertible Securities. The fund has been trading at a discount of 12% to 24% of its net asset value for the last few years.

Unlike their open-end brethren, closed-end funds issue a set number of shares that trade on a stock exchange much the same way that equities do. When a fund is first issued, its net asset value and stock price are the same, or par, but the stock price quickly starts trading a discount or premium, depending on investor demand.

The decision to fold the fund into an open-end fund comes on the heels of a preliminary Securities and Exchange Commission proxy filing in late May by Ralph Bradshaw, a fund shareholder and a consultant to Deep Discount Advisers, a closed-end funds specialist that owns 8.5% of the fund's shares. In the filing, Bradshaw drew attention to the fund's widening discount. He also informed other shareholders of his plans to nominate himself and two others to the fund's board of directors.

Open-ending the fund is a major coup for existing shareholders because they'll be able to redeem their shares at net asset value. At the end of 1999, the fund had a discount of about 24%.