http://news.morningstar.com/articlenet/article.aspx?id=698713
I found four managers at six funds who formerly had more than $1 million of their own money in their funds but have sold their positions completely. In most cases, the fund companies did not provide an explanation. There are some plausible excuses, such as divorce or home purchases, to explain why they might have sold their holdings. Other possible reasons could include managers moving their money to other funds that they think focus on a more appealing asset class. Still, it’s pretty discouraging to see managers selling the following funds, all of which have some appeal.
Wells Fargo Advantage Small/Mid Cap Value (SMMVX) and Wells Fargo Advantage Small Cap Value (SSMVX)
Charles Rinaldi sold his entire stake in both of these funds, which he has managed for years. Wells Fargo said the longtime lead manager did so for estate-planning purposes. That makes me wonder if he is nearing retirement; he’s now likely in his 70s, as he graduated from college in 1965. I’d feel better if his comanagers showed more enthusiasm for these funds. Michael Schneider has investments in both in the $10,001–$50,000 range, and Eric Astheimer has nothing in either fund.
Scout Unconstrained Bond (SUBFX)
Mark Egan quickly ramped up to more than $1 million in the fund after it was launched in 2011, but then he sold his shares. The latest filings don’t show Egan investing in any of the six funds he comanages. However, Scout said Egan took the money out for tax reasons and later invested the bulk back into this fund. In addition, comanagers Thomas Fink and Todd Thompson each have more than $1 million in this fund.
Fund Company Mistakes
In researching this article, I heard from Wells Fargo that it had erred in its filing for Wells Fargo Advantage Absolute Return (WARAX). The firm had incorrectly reported that manager Ben Inker had more than $1 million invested, and then the next filing said he had nothing. Wells Fargo said he never had anything in the fund and just had money in the GMO fund that the Wells Fargo fund invests in. It’s a telling story, as Wells Fargo layers on additional fees, and investors in the underlying GMO fund have enjoyed better performance thanks to lower fees.