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Marsico Flexible Capital (MFCFX) - Fund mgr change: What are you doing ?

edited August 2012 in Fund Discussions
As you know, Douglas Rao quit Marsico and went elswhere.
The managers who took over have not done well with other funds at Marsico.
Consesus opinion that I gathered here as well as at M*, wait and watch until there is a proof that peformance is deteriorating . My concers is that Harbor is liquidating its flexible capital fund, which was also managed by Rao. Looks like, either they do not have enough confidence in replacement mgrs or they have not collected enough assets and liquating it. I think it is the former rather than later.

Pls. let me know your thoughts.



  • Drop it.......Marsico is bleeding talent, and I am begining to suspect that Tom is starting to worry about paying his bills. That was really the only fund that was attracting new money.........If you look at FUM in 2007 compared to now, it is not even close.....Austerity at a fund shop is never a good thing.......
  • Note only that but numerous Analysts have left too.

    From M*

    Doug Rao, manager of Marsico Flexible Capital (MFCFX) and comanager of flagship funds Marsico Growth (MGRIX) and Marsico Focus (MFOCX), is leaving Marsico Capital Management on July 20, 2012. His is the latest in a series of departures from the firm over the last two years. Jordan Laycob and Munish Malhotra, who've been at the firm since 1997 and 2004, respectively, will comanage Flexible Capital. Firm founder Tom Marsico remains lead manager and Coralie Witter comanager on Growth and Focus. Joshua Rubin, a comanager on Marsico Emerging Markets (MERGX), also announced he was departing.

    Rao joined Marsico Capital Management in 2005 and moved up the ranks quickly, taking over as manager of Flexible Capital in 2007. He made ample use of that fund's go-anywhere mandate, holding roughly 20% in cash in 2008 and one third of assets in non-United States stocks, including some emerging-markets picks, in 2009. Such moves helped fuel the fund's dazzling gains compared with its large-growth peers--as well as the world allocation category average--during his five-year tenure. Following Cory Gilchrist's departure last fall, Rao was the firm's most experienced U.S. equity manager after Marsico.

    Rao's successors are less experienced. Laycob has been a Marsico analyst since 1997 and the firm's sole fixed-income specialist, but he's never run a fund before. Malhotra has been a comanager of the $5 million Marsico Emerging Markets fund since its late 2010 inception, but that fund has lagged its diversified emerging-markets peers and the MSCI Emerging Markets Index since its birth and it has seen a lot of manager turnover. Rubin, who had been a manager on Marsico Emerging Markets since 2010, resigned just two months after comanager Charlie Wilson left the firm.

    Turnover has also struck the analyst team. Seven team members who joined between 2003 and 2008 have left since 2010. Five new analysts came on board since last year, but only one had previous investment experience. The firm's troubles attracting and retaining talented investors coincides with financial woes. Marsico bought his firm back from Bank of America (BAC) in a highly leveraged deal in 2007, just before the 2008 market meltdown and investor outflows depleted the firm's asset base. As a result, the company restructured its debt in 2010. The firm's inability to retain and attract experienced investors has undermined investor confidence. Indeed, the firm is on pace for its fourth straight calendar year of significant outflows. Since 2008 through the end of June 2012 the firm has seen more than $5 billion leave its mutual funds and has lost outside subadvisory deals. Recently, John Hancock fired Marsico as the subadvisor for John Hancock Funds II International Opportunities (JIIOX), citing disappointing performance. John Hancock has hired a team at Invesco led by Clas Olsson to replace Marsico and eventually plans to merge the fund into John Hancock Funds II International Growth Stock (JGSNX), which Olsson and his team have managed since 2010.

  • Thanks for the replies.
    I am aware of the analysts too and pretty much the whole situation at Marsico.
    I felt that Tom might have problems in accepting the credit and popularity other mgrs are getting, when MXXIX left (though his fund started its underwhelming performance couple of years before he lef).

    Let me deliberate for a few more days before deciding one way or the other.
  • Hi Mrc,

    I sold my position in HAFLX the day after Harbor announced that they would be liquidating the fund. If I owned MFCFX, I would definitely sell it immediately. Marsico is hemorrhaging talent -- both managers and analysts -- and I would not entrust my hard earned money to the new, untested managers of MFCFX, especially over the next few months which should be very turbulent for the global markets.

  • Thanks Kevin and everyone else.
    I will sell it in a day or two.

    Any replacement fund that you would suggest.
    A go-anywhere fund with growth orienation ?
  • I would take a serious look at LSWWX. This fund definitely has a growth bias, relatively low AUM, a low ER, and attractive Upside/Downside capture ratios in all periods that I have studied. Plus you get Dan Fuss as the manager of the FI sleeve.

    This fund is available at Scottrade for a minimum of $100 in both types of accounts with a transaction fee. I purchased my initial position at Scottrade and moved it to Wellstrade where I have added to my position.

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