Seeks performance boost to show the worth of active management
OppenheimerFunds is trying to give its value funds a boost with the help of a rival's team.
The company last Thursday said that it has hired Laton Spahr, former manager of the $5.3 billion Columbia Dividend Opportunity Fund (INEGX), along with three other Columbia Funds veterans, to take over OppenheimerFunds' value funds.
“The value funds have been laggards over the past couple of years,” said Art Steinmetz, OppenheimerFunds' chief investment officer. “We saw this as an opportunity to grab some of the top talent in the value investing sector.”
Talent is at a premium now because of the extra pressure that active managers face from low-cost index products such as exchange-traded funds, Mr. Steinmetz said.
“We're required to demonstrate we're worth the fees we charge every day,” he said. “There's no room for closet indexers in an active-management shop anymore.”
Mr. Spahr will become manager of the $2.2 billion Oppenheimer Value Fund (CGRWX) and the $1.4 billion Oppenheimer Small & Mid Cap Value Fund (QVSCX) on March 11.
Former managers John Damian and Mitchell Williams are no longer with OppenheimerFunds, spokeswoman Kristina Ferrari Baldridge said.
CHANGE UNSURPRISING
In addition, OppenheimerFunds added Eric Hewitt as a co-portfolio manager on the Small & Mid Cap Value Fund, and Kyle Bergacker and Daniel Hozian as analysts.
The change isn't surprising, according to Morningstar Inc. mutual fund analyst David Kathman.
“Both funds used to be star performers but have been struggling in recent years,” he said.
The Oppenheimer Value Fund, for example, finished in the bottom quartile of large-cap funds over the trailing three- and five-year periods as of Feb. 27. The Small & Mid Cap Value Fund finished in the bottom 10% of all midcap funds last year.
Mr. Spahr's previous fund, which he co-managed with Steven Schroll and Paul Stocking, has done much better recently.
Its three- and five-year returns as of Feb. 27 rank in the top 10% of all large-cap-value funds, according to Morningstar.
Mr. Schroll and Mr. Stocking are staying at Columbia.
“We have a strong team in place,” Columbia spokesman Ryan Lund said in a statement. “The funds are team-managed, and the current managers both have more than 25 years of investment experience.”
