Fund Openings, Closings, Manager Moves: Merrill to Clone Two McCall Funds
Eager to boost sales,
Merrill Lynch
(MER)
is preparing to clone its two funds, run by vaunted large-cap growth specialist Jim McCall, which essentially mimic the two funds he ran at his old firm,
PBHG
.
Although the new entities bring McCall's fund tally to four, he'll still only be running two portfolios, according to preliminary paperwork filed with the
Securities and Exchange Commission
yesterday. That's because the two new funds,
Mercury Premier Growth
and
Mercury Focus 20
, will invest their assets in
Merrill Lynch Premier Growth
and
Focus Twenty
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, the two McCall funds Merrill launched last month. Merrill's Focus 20 has $668 million in assests, while Premier Growth has $102 million.
The SEC is reviewing the funds paperwork and Merrill hopes to launch them toward the end of March, according to a spokesman.
The new funds will be sold through financial advisers by
Mercury Asset Management
, which Merrill acquired in 1997. With a Mercury label, it will be easier to sell the funds through non-Merrill brokers and financial advisers, who typically chafe at selling funds with a competitor's name on it, says a Merrill spokesman. Broader distribution is probably a hot topic at Merrill, whose funds lost more than $18 billion in 1998 and 1999, according to Boston fund-tracker
Financial Research
.
You might remember McCall and PBHG were embroiled in a very public
spat when he left the firm. These Merrill and new Mercury funds mimic two PBHG funds he ran:
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Large Cap Growth and
(PLCPX)
Large Cap Twenty. The first style invests in a broad portfolio of large-cap growth stocks, while the second focuses on just 20 large-cap growth stocks.
At PBHG, McCall rode big growth stocks with earnings momentum. That risky strategy led to outsized bets on technology, but it also led to outsized returns. For instance, in the two years before his March 31 departure, Large Cap Twenty posted a 62% average annual return, nearly doubling the
S&P 500
, according to the new funds' filings.
The new funds will have various share classes charging front- or back-end loads or sales charges ranging from 1% to 5.25%. The management fee for Premier Growth will be 0.75%, while Focus Twenty will charge 0.85%. Both funds' 12b-1 or marketing fees range from 0.25% to 1%.
Munder International NetNet's ETA
Officials at broker-sold
Munder Funds
say their new
Munder International NetNet
fund will launch on April 3, as long as the fund's filings don't get bogged down at the SEC.
TSC
previewed the new fund on Jan. 25. Munder's domestic $7.7 billion
(MNNAX)
NetNet fund is easily the largest Internet fund.
Munder Name Changes
Munder's
(MUGKX)
Growth & Income and
Equity Selection
funds will now be called
Equity Income
and
Focus Growth
, according to paperwork filed with the Securities and Exchange Commission Friday.
The $205 million Growth & Income's name change highlights the fund's conservative approach and fat yield. On Jan. 31, portfolio manager Otto Hinzman had no tech holdings, according to
Morningstar
, and nearly 60% of his fund's assets were invested in industrials, financials and utilities.
This value bent has led to some poor relative performance. The fund trails at least 80% of large-cap value funds over the past one-, three- and five-year time periods. That said, it might be a good choice for conservative, income-minded investors. The fund's current yield is 1.33%, well ahead of the average large-cap value fund's 0.88%.
Equity Selection, now Focus Growth, appears to be too young -- or small -- to be in any databases yet. It's apparently not even on Munder's
Web site, where the Growth & Income name hadn't changed yet.
Wednesday's Fund Openings, Closings, Manager Moves
