Morningstar Advisor - August/September 2013 - (Page 56)
Undiscovered Manager
Greener Pastures
By Rob Wherry
Dale Harvey left the burdens of managing $20 billion for Capital
Group to form his own boutique inspired by Thomas Jefferson.
Dale Harvey didn’t like being popular. In the
mid-2000s, Harvey found himself managing $20
billion in mutual fund assets for Capital
Group, the parent firm of American Funds.
Harvey had built up solid records running
diversified sleeves of several team-managed
funds such as Washington Mutual AWSHX,
SMALLCAP World SMCWX, and American
Balanced ABALX. His work hadn’t gone
unnoticed by investors and his colleagues. Each
morning, it seemed, he came into the office
to find that the lead manager on the funds had
earmarked more inflows for him to invest.
56 Morningstar Advisor August/September 2013
Most managers wouldn’t mind having such a
problem. But Harvey considered it a burden.
For starters, he often couldn’t build full
positions in the out-of-favor companies he
preferred without tripping over restrictions on
how many of the outstanding shares he
could buy. Investing millions of dollars at a
time, he also ran the risk of artificially popping
stock prices. Most concerning to Harvey,
though, was the idea of buying stocks he didn’t
have high conviction in.
“I had to put the money to work. I was managing
$20 billion, but I didn’t have $20 billion
[worth of] good ideas,” he says. “I would buy
all the shares I was allowed to buy, and it was
just a half position.”
To Harvey, it became clear there was just one
solution: leave the firm he had called home
for 16 years. What he was contemplating was a
drastic step, both on a personal level and
from the perspective of his employer. Manager
turnover is low at Capital Group, which is
reflected in the fact that 91% of its almost $1
Table of Contents for the Digital Edition of Morningstar Advisor - August/September 2013
Morningstar Advisor - August/September 2013
Contents
Contributors
Letter From the Editor
Under Pressure
Has Your View of Bonds Recently Changed?
The Simple Life Cuts a Path to Prosperity
How Extended Is Your Bond Fund?
A Bond Contrarian Scours the Globe for Value
Investments á la Carte
Investment Briefs
Bond Market Behemoths
Shopping in the Digital Age
Shopping in the Digital Age
Diverse Crowd
Motor City Meltdown
Bond Convergence
Corporates Are Fairly Valued, but Opportunities Will Arise
A Legend Still Pines for the Good Fight
Greener Pastures
Forecasting Market Bubbles and Crashes
Forecasting Market Bubbles and Crashes
Home-Court Advantage
Overcoming Technophobia
These Funds Are Counting on Undervalued Sectors
Our Favorite Mutual Funds
50 Most-Popular Equity ETFs
Undervalued Stocks With Wide Moats
What Price Advice?
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