Turner Micro-Cap Growth, one of the hottest no-load micro-cap funds, is about to close its doors.
The $198.3 million fund will stop taking money from new investors when its asset level hits $250 million, or on April 3 if it's still under its asset target, according to a Monday announcement.
Launched March 1, 1998, the fund has posted a 200.9% return over the past year. That's better than 95% of its peers according to
. Not surprisingly, managers Frank Sustersic, Bill McVail, and Chris Perry had about half the portfolio invested in the technology and health care sectors at year-end.
Turner Investment Partners
takes a strict stance regarding fund closures. When the $6 billion fund family sets asset targets, it takes not only a fund's size into account, but also private accounts managed in the same style.
Turner closed its
Small Cap Growth fund at just $135 million in August 1997. Fund companies often let a small-cap fund grow to 10 times that size before closing the doors -- sometimes long after a fund's size has begun to hurt performance.
Closing the fund looks like a good move for current shareholders. As micro- and small-cap funds grow in size, it gets harder for them to move nimbly among thinly traded issues without moving their prices and reducing returns. The fund has stuck to its micro-cap focus, with a median market capitalization of $327 million, but cash may be coming in faster than the managers can put it to work. At year-end, the fund's cash position stood at about 13%, which is high.
Morningstar doesn't have a micro-cap growth category for comparison, but the fund's 1.25% annual expense ratio is below the average small-cap growth fund's 1.7%.
Guinness Goes Wireless
Investec Guinness Flight
has been reading our email -- or investors' minds. Recently, readers have been asking
staffers which funds have the biggest bets on wireless communications companies. Monday the fund shop launched
Wireless World will take a broad view of the sector, according to paperwork filed with the
Securities and Exchange Commission
, investing not only in wireless communications stocks, but also in companies that will benefit from a shift to wireless communications. The filings imply the fund could hold financial and automobile stocks among other non-telecommunications issues.
It's this kind of broad approach to a sector that allows an Internet fund like
WWW Internet hold
The Wireless World fund will hold 40 stocks, mostly mid- and large-cap, but it can dip into small-caps as well. The fund is non-diversified, meaning it can take big bets on a relatively small number of stocks. Unlike Investec's two other sector funds (
Wired Index and
internet.com Index) this fund will be actively managed. Institutional veteran Nigel Dutson will be the skipper. He doesn't appear to have experience managing a retail U.S. mutual fund.
It's not really surprising that there's rising interest in the sub-sector given that it bridges the telecommunications and technology industries with innovations like wireless Net access. Mobile phone stocks like
are up 196% and 266%, respectively over the past year, and the fund company says both are likely fund holdings.
The new fund's 1.75% annual expense ratio is higher than the average communications fund's 1.44% average, according to
New Managers for AIM High Yield Funds
has shuffled managers between the struggling, $1.3 billion
High Yield fund and its stronger sibling, the $100 million
High Yield II fund.
Chief fixed-income officer Robert Alley and portfolio managers Jan Friedli, Carolyn Gibbs, and Craig Smith took the reins of both funds on Friday. They replace John Pessarra and Kevin Rogers, who have left the firm.
Pessarra and Rogers had worked on High Yield since 1992 and 1995, respectively. High yield, or junk, bonds haven't had a smooth ride lately, but the fund has underwhelmed for some time. It underperformed its average peer in each of the past three calendar years, and has posted a three-year average annual return of just 2.3% through Friday's close. That trails 80% of its peers, according to
. Over the past five years, the fund's average annual return is 7.4%, but that still ranks in the category's bottom quartile.
High Yield II, on the other hand, launched in 1998 as a nimbler, more aggressive alternative and has performed well. Over the past year Pessarra and Rogers have posted a 21.3% return, beating 99% of their peers and High Yield, which returned just 1.2% over the same time period. High Yield II holds 5.4% in stock, compared to just 0.6%, according to the most recent portfolio data from Morningstar.
Alley, Gibbs, and Friedli will be busy. Earlier this month they also took over the firm's
Strategic Income fund. The three now manage five funds, according to AIM's
Web site. That fund's former managers are still with
funds -- AIM and Invesco are subsidiaries of
Ironically, former High Yield manager Rogers was also added to Strategic Income management team earlier this month. He's no longer listed as a member of that fund's management team on the company's Web site.
Pioneer Buys High Yield Fund
is buying its way into the high yield business.
The firm acquired the $9 million
Third Avenue High Yield
last Friday and relaunched it as
Pioneer High Yield on Monday.
Margaret Patel, who has compiled an enviable record over the fund's short history, will continue to manage it. The fund has posted a 35% return over the past year, beating 99% of its high yield peers, according to
It looks like Patel used convertible bonds to keep the fund riding high in a tough time for high yield, or junk, bonds. Convertible bonds, or converts, are stock/bond hybrids. Like bonds they pay a fixed income stream, but they can be converted to a fixed number of shares of the issuer's stock too. This way, convertible bonds can offer stock-like returns. (For more details see our stories on
converible bond funds and
At year-end, Patel had nearly 37% of the fund invested in convertible bonds. While that weighting gave the fund a significant boost, it may come down in the future, says a Pioneer spokeswoman.
The tiny fund's 1.9% expenses are well above the category's 1.32% average, according to Morningstar.