Fund Openings, Closings, Manager Moves: Elusive Fund Manager Tracked Down - TheStreet

Fund Openings, Closings, Manager Moves: Elusive Fund Manager Tracked Down

Author:
Publish date:

As

Inspector Clouseau would say, the case of the missing fund manager is solv-ed.

Last week Andrew Kaplan

left Fidelity, where he managed

(FSPTX) - Get Report

Select Technology and

(FSDCX) - Get Report

Select Developing Communications funds, for a job with an unnamed firm. Since then, industry insiders and fund investors have been clamoring to know where the elusive Mr. Kaplan went.

It appears he's headed to a hedge fund:

Pequot Capital Management

, based in Westport, Conn.

Pequot chief executive Art Samberg didn't return a call for comment, but a woman answering his phone confirmed Kaplan is scheduled to start working in Pequot's Manhattan office on Feb. 28.

Pequot has five technology funds, according to its

Web site, and the tech specialist might lend a hand there. The woman at the Pequot office couldn't confirm which funds, if any, Kaplan would manage.

In 1999, Kaplan's Select Technology and Select Developing Communications funds returned 131.7% and 122.4%, respectively, for Fidelity investors. But most investors probably won't be able to hire Kaplan at Pequot because hedge funds are only available to institutions and well-heeled individuals, those with at least $1 million in liquid assets.

Successful hedge funds' management fees are higher than those of mutual funds, which menas they can pay portfolio managers more. A hedge fund typically charges 1% of assets and 20% of profits. Mutual fund management fees are usually a percentage of assets, often with no performance incentive.

Rising Fidelity star Erin Sullivan

left her

(FDEGX) - Get Report

Aggressive Growth fund on Valentine's Day to start her own hedge fund

Franklin Small Cap Growth to Close

April 30 will be a big day for the $11 billion

(FRSGX) - Get Report

Franklin Small Cap Growth. On that day the fund will close to new investors, change its name and -- essentially -- clone itself.

The fund will close April 30 to new investors and change its name to

Small Cap Growth I

. Why? Because the next day

Small Cap Growth II

launches as a second option for those shut out of the original. The new fund will have the same managers and strategy as the original, but its portfolio and performance will differ.

As usual the closing fund isn't really so closed. Current shareholders, retirement plan investors, investors who participate in broker wrap programs and those who buy Class C shares will still be able to invest after April 30.

Apparently the fund's size is hampering managers Edward Jamieson, Michael McCarthy and Aidan O'Connell's ability to nimbly invest among thinly traded small-cap stocks. That's not really a surprise since the industry's rule of thumb is that a small-cap fund should be closed before it hits $1.5 billion. The average small-cap growth fund has just $451 million, according to

Morningstar

.

It looks like the managers have tried to cope with the fund's girth by expanding the portfolio. On Nov. 30 -- the most recent portfolio data available -- the fund held 364 stocks, more than three times its average peer's holdings. Despite such a sprawling portfolio the fund's record since its 1992 inception is solid. Over the past five, three, and one-year periods, the fund beat the average small-cap growth fund, according to Morningstar.

The fund averages a 34.7% annual return over the past five years. More recently the team rode an outsized tech-stock weighting to a 131.9% one-year return.

The closing fund's expenses are below average, but its A shares levy a 5.75% front-end sales charge or load and its C shares charge a 1% front-end sales charge and a 1% back-end sales charge on shares sold within 12 months of purchase.

Tuesday's

Fund Openings, Closings and Manager Moves

Monday's

Fund Openings, Closings and Manager Moves