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PBHG's Baxter to Step Down From Emerging Growth Fund

Baxter, who has been with the fund since its inception, will move to PBHG's private equity group.

Christine Baxter, who once managed more than $1 billion in mutual fund assets for

PBHG Funds

, is handing the reins of the PBHG


Emerging Growth fund to a colleague and moving to the firm's private equity group.

Erin Piner, who manages PBHG's $110 million


Limited fund, will take the reins of Emerging Growth on Jan. 1. Baxter managed the Limited fund before turning it over to Piner in October 1998. The two funds had a combined $1 billion in assets at that point.

The $768 million Emerging Growth fund lags most of its small-cap growth peers, including PBHG's other two small-cap growth funds with one-year records, Limited and

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Strategic Small Company. But parent company

Pilgrim Baxter & Associates

says the change isn't motivated by underperformance, and that Baxter's move is her decision. The move was announced in a Dec. 23 regulatory filing.

Emerging Growth shareholders who've hung on through the firm's recent manager

TheStreet Recommends

spats and

departures shouldn't worry about a significant strategy shift. The firm's small-cap managers all follow an earnings momentum approach, and Piner has worked closely with Baxter over the past four years, according to company spokesman Tucker Hewes. This year, Piner's Limited fund is beating its category average by more than 8 percentage points.

"It's not necessarily a bad thing that they're changing the manager," says Jim Folwell, an analyst with Boston fund-researcher

Cerulli Associates

. He points to


Janus Twenty as an example of a fund's system working after the departure of the manager, in that case

Tom Marsico


Of course, Emerging Growth's style has led to some white-knuckle volatility. In the past three years the feast-or-famine momentum style has helped Emerging Growth post quarterly losses and gains of as much as 20%. Morningstar gives the fund its worst grade ("F") for risk.

Baxter, 30, daughter of Pilgrim Baxter Chairman and CEO Harold Baxter, has managed the Emerging Growth fund since its 1993 inception. She will move to PBHG's private equity group, which manages

Pilgrim Baxter Hybrid Partners I

, a $283 million private equity fund that closed in 1996. The firm hopes to expand its private equity business.

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