"It's about stewardship of a fund, but it's also about communication to shareholders," Andrew Gogerty, analyst at investment researcher Morningstar Inc., told Dow Jones. "None of [the moves] were explained."
Gogerty said RiverSource, a unit of
"I can't tell you the last time a shareholder got stuck with a charge like this," he said.
Usually fund managers absorb these costs when they take over other funds, but a spokesman for RiverSource said shareholders were charged this time because it was a special condition that will save investors money in the future.
American Century received Gogerty's failing grade for switching managers without explaining the move to investors, calling the conditions surrounding the move "unacceptable."
"If you're a shareholder in a great four-star fund, you don't expect a management change," he said.
Oppenheimer failed investors by not telling them that two of its bond funds had recently taken on extra risk. Oppenheimer's normally stable Champion Income and Core Bond funds saw huge losses in 2008, dropping 78% and 36% respectively.
"The managers bought complex, off-balance-sheet swap contracts that created a leveraging effect on the funds," Gogerty said. The managers made no attempt to tell investors that the funds were taking on additional risk, he said.
An Oppenheimer spokesman said the specific swaps mentioned were widely used by funds in the same categories and had had "outstanding" performance the four prior years.
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.
