Jim Callinan is one of the hottest growth managers in the mutual fund business right now, and
RS Investment Management
plans to heap a new fund on his plate.
RS, the San Francisco investment-management arm of
, filed a preliminary prospectus Friday for a new Callinan fund with the
Securities and Exchange Commission
. Last year, Callinan's
RS Emerging Growth posted a 182.5% return, and he
coveted Domestic-Equity Manager of the Year honor. Emerging Growth focuses on small- and mid-caps, but the new
fund will allow him to seek growth in companies of any size.
The new fund's broader focus will give him more room to invest in bigger, more liquid stocks, which could be a boon since investors are making a habit of sending him money. When Callinan left
to take over RS Emerging Growth in 1996, the fund had $193 million in assets. At the end of 1999, the fund had $3.6 billion. He also manages more than $800 million in private accounts. Many small-cap funds have closed at lower asset levels, and some
say the fund should close before its assets cause its returns to drag.
Small- and mid-cap stocks are typically less liquid than large-caps, so a large fund can have a hard time moving nimbly among smaller stocks. If the fund doesn't build or reduce its positions gradually, it can move a stock's price and reduce returns.
Investors don't seem worried about Emerging Growth's size or Callinan's workload. They've shown they're willing to gobble up shares of any fund with Callinan's name on it, and RS has started spreading that name around. In December, RS launched the
Internet Age fund and made Callinan a co-manager with Cathy Baker. On Jan. 31, the fund already had $135 million, according to
Both Emerging Growth (25.8%) and Internet Age (23.9%) are well ahead of their peers so far this year through Friday's close. That kind of performance is probably the firm's best proof that Callinan isn't too busy.
It's not clear when the new fund will launch -- fund companies are prohibited from discussing a new fund until the SEC approves the paperwork. It looks as if Aggressive Growth will run similarly to Emerging Growth, with big sector bets and high turnover, according to the new fund's prospectus.
On Nov. 30, nearly 60% of Emerging Growth was invested in tech stocks. At year-end, the fund's top three tech holdings were
(1.7%). The stocks were up 108.8%, 34.2% and 52.3%, respectively, for the year through Friday's close. The fund's turnover rate was 291%, more than triple the average stock fund.
The new fund won't be cheap either. It will charge 1.88% in annual expenses, compared with 1.29% for the average stock fund, according to Morningstar.
More Manager Shuffles at Fidelity
Another tech manager has packed up his fat 1999 return and bonus and left
, where 29 funds have gotten new managers over the past three months.
Late last Friday, the nation's largest fund company announced Matthew Grech had left the company and equity analyst Nicholas Tiller would take his place on
Select Energy Service, effective today. Also, this Friday Jeffrey Feingold will take over
Select Transportation and
Select Air Transportation, and Pratima Abichandani will take the reins of
Select Medical Delivery.
Feingold, who will keep managing
Select Defense and Aerospace, succeeds Christopher Zepf, who is taking an analyst position in the firm's vaunted technology area. Abichandani, an equity analyst with some experience managing international portfolios, replaces Shep Perkins, who is taking an analyst job covering the communications and utility sectors.
Manager shuffles aren't uncommon at Fidelity, where the average manager tenure is less than three years, according to Morningstar. Turnover is particularly high among the firm's Select portfolios. Fido uses these sector-specific funds to give promising analysts portfolio management experience, and analysts typically rotate among the funds every year or two. In a humbling twist, the high turnover doesn't typically boost or hurt the funds' returns, which is driven more by each sector's performance than manager skill.
Fidelity stars like
Magellan manager Robert Stansky learned the ropes in this system.
But over the past three months, some manager changes have warranted more attention. On Feb. 1, George Vanderheiden, the venerable
Destiny I manager whose record often earned comparisons with Peter Lynch,
retired. Then on Valentine's Day, Erin Sullivan, a 29-year-old rising star being groomed for bigger things, shocked the firm by
leaving her post at
Aggressive Growth to start her own hedge fund.
Also, Grech is only the latest tech specialist to take his triple-digit returns from last year and hit the road. On Feb. 7, Andrew Kaplan
Select Technology and
Select Developing Communications to take a job with
, a hedge fund manager based in Westport, Conn.
With more than 180 retail mutual funds, though, it would take a few more changes to truly rattle the $928.8 billion Boston behemoth.
"Every December and January, Fidelity sees a flurry of activity, just after managers get their bonuses. If we see a couple more diversified fund managers leaving, that might be troubling," says Jim Lowell, editor of
, an independent newsletter.
Managers Moves at Alleghany
Alleghany/Chicago Trust Growth & Income and
Alleghany/Veredus Aggressive Growth funds have new co-managers, and
Alleghany/Chricago Trust Municipal Bond has a new manager.
announced Tuesday that Richard Drake will Join Bernard Myszkowski on the $524 million Growth & Income fund, Charles McCurdy will join Tony Weber on the $114 million Aggressive Growth fund and Dawn Daggy-Mangerson will take the reins of the $16 million Municipal Bond fund.
Drake joins the firm from
Duff & Phelps
. McCurdy has worked with Weber since the pair founded
Veredus Asset Management
two years ago, and Daggy-Mangerson previously ran national municipal bond funds for
Alleghany offers 12 no-load funds, run by managers at institutional affiliates
Montag & Caldwell
, Veredus Asset Management and
Blarilogie Capital Management
Each of the three funds has below-average expenses. Of the three, Aggressive Growth appears to be the standout. Last year, the small-cap growth fund posted a 119% return.