A recent decision by the Clipper Fund to switch management firms - from its sibling firm Pacific Financial Research to Davis Selected Advisors - might be a defining moment for the mutual fund industry, according to the Orlando Sentinel.

Kansas City, Mo.-based Clipper decided to take the highly unusual step because the longtime managers of the fund recently announced that they would leave the fund at the end of the year. But instead of allowing the fund's $6.6 billion in assets to simply fall into the hands of their replacements, which would probably be the soundest financial move for Clipper, the directors chose to not risk a potentially inexperienced management team and decided to go in an entirely different direction.

"It is a potential sea change in mutual funds," said Christopher Davis, an analyst at Morningstar in Chicago and no relation to Christopher Davis at Davis Selected Advisers.

Not only does the move ensure that the fund sticks to its value-investing philosophy, shareholders will also pay smaller fees. Davis charges a management fee of 0.65% of assets, while Pacific, which is also part of Old Mutual Capital charges 1.0%.

"To hire a new manager from outside their own extended fund company really is a watershed event in mutual funds," said Merrill Lynch analyst Guy Moszkowski. "The ability of fund directors to choose new managers is often discussed but seldom invoked.

"Tolerance for underperformance may shorten," Moszkowski added. And a fund that underperforms "will increasingly feel pressured by outflows and inquisitive boards."

The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.

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