Van Kampen Investments has laid off its Oakbrook Terrace, Ill. taxable fixed-income team and shifted the assets they manage--some $6.5 billion divided between several high-yield, government, and investment-grade funds--to fixed-income managers at Miller Anderson & Sherrerd (MAS), in West Conshohocken, Pa., according to a Van Kampen spokeswoman. The managers laid off as a result of the changes are Ted Mundy, manager of several government funds, investment-grade manager Kelly Gilbert, and high-yield manager Robert Hickey referred all calls to the firm spokeswoman. Van Kampen and Miller Anderson are subsidiaries of Morgan Stanley Investment Management. The spokeswoman says the move was not a cost-cutting measure nor related to poor performance, but rather was done to consolidate the firm's fixed-income operations in the hands of the managers with the most resources.
A MAS team that includes Gordon Loery, Stephen Esser, and Deanna Loughnane will manage the high-yield portions of the funds. David Armstrong, Paul O' Brien and David Horowitz, will manage various government funds, andAngelo Manioudakis will handle the investment-grade portion of the funds.
Several of the funds contain a high-yield component, and on a Morningstar percentile scale of 1 to 100, with 1 being the best, both Van Kampen's and MAS's high yield funds rank in the high 70-80 percentile over the 12-month period ending June 30. MAS funds have performed better over the last three years, however, with Van Kampen's funds ranking in the 60s and MAS in the 40s and low 50s.
The spokeswoman says the layoffs were felt to be in the best interest of investors, but the actions of Rod Dammeyer, a board member for two of the closed-end funds affected by the changes, could suggest otherwise. Insider trading data from First Call/Thomson Financial shows that Dammeyer sold roughly $1 million of his shares in the Van Kampen High Income Trust and Van Kampen Bond Funds in the months leading up to the management changes, which had to be approved by the board. "It would be difficult for me to speculate about why he did it," says the spokeswoman. Dammeyer was on a cruise ship last week, according to his secretary, and could not be reached for comment.
Kathryn McGrath, partner at Morgan Lewis and former director of the division of investment management at the Securities and Exchange Commission, says Dammeyer's trades would warrant investigation if he knew of the layoffs before making the trades. However, given that he is not employed by Van Kampen or its affiliates, it is unlikely that he knew of the changes in April, when he began selling his shares in the funds. "Management companies don't tell fund directors everything," says McGrath, who is herself a fund director.
The 17 funds affected by the changes will maintain the Van Kampen name due to its wide recognition, according to the spokeswoman. The spokeswoman says the firm did not publicly describe the management changes in detail because "the company is trying to focus on the team, which is not dependent on one manager."