In a move said to be part of a strategy to develop new business, David Johnson has handed off the reins of co-heading the municipal mutual funds group at Van Kampen Funds to colleague Dennis Pietrzak.
Johnson said Thursday that the change, which was effective last month, is meant to free up his time to focus on expanding business at the Oakbrook Terrace, Ill.-based firm. He added that they are targeting the growing market for high-net-worth investors, and would be introducing new products as early as the spring, though he would not specify what those products will be.
Currently, Van Kampen has around $13 billion in assets split between its open-end and closed-end municipal mutual funds.
"We're trying to offer something for very high-net-worth investors," Johnson said. "There are other products that can meet their investment objectives."
By way of explanation, Johnson added that a large part of that growing pool of money is finding its way into separately managed accounts and individual bonds, as opposed to retail mutual funds. Still, the 10-year veteran of the firm will also continue to manage funds. Currently he is the lead manager of the firm's tax-free high income fund, as well as three national closed-end funds.
Pietrzak, meanwhile, manages two state-specific open-end funds -- New York and Pennsylvania -- as well as ten closed-end funds.
Pietrzak has been a fund manager at Van Kampen for five years, and joined the firm from the sell side at Merrill Lynch & Co., where he was in charge of that firm's Chicago municipal securities operations. He shares the reins at Van Kampen with Richard Ciccarone who, in addition to being co-head of the municipal group, is head of municipal research.
Johnson was in town Thursday to pitch the company's closed-end funds, a semiannual occasion for Van Kampen. However, there was a small cloud hanging over the event -- this week, Kristoph Rollenhagen of Prudential Securities Inc. downgraded ratings on four of the firm's funds.
In a report issued Tuesday, the analyst laid the cause of the downgrades on Prudential economists, who recently revised their outlook for interest rate hikes to come this year. They now say there should be three more interest rate hikes by the Federal Reserve Board before the end of the mid-year.
The problem, according to Rollenhagen, is that rising rates in 1999 torpedoed leveraged closed-end funds, and the revised expectations of more rate hikes should do the same this year. On that note, the municipal funds he had been rating as a strong buy because of their heavy discount are now being rated as simply accumulate.
In addition to four Van Kampen municipal funds, the analyst downgraded a Nuveen Investment Management fund, an Eaton Vance Management fund, and two BlackRock Inc. funds. The downgrade was unprecedented, Rollenhagen said, explaining that he also dropped the rating on six taxable leveraged closed-end funds.
"I've never done 13 ratings in one swath," he remarked, adding, "This evaluation is almost exclusively a macro call."
In all, Rollenhagen follows 14 municipal closed-end funds. Eleven of those are now rated accumulate, while two are rated hold, and one sell. He also follows five unleveraged funds, all rated accumulate, and three term-limited funds, which are also rated accumulate.
In other closed-end fund news, Merrill Lynch Asset Management announced Wednesday that shareholders have approved the reorganization of some of its California, New Jersey, and New York funds.
Four California insured closed-end funds will be merged into one, as will three New Jersey funds, and four New York funds. The resulting three funds all trade under Merrill's MuniHoldings trademark name.
