Charles Schwab Corporate Services could add an additional small-cap manager in the next year for its target-date funds. John Sturiale, portfolio manager, said the target date funds' current manager, Turner Investment Partners, has been good but may not have enough capacity for the assets coming in. Turner, he said, offered Schwab $100 million in capacity and the funds are currently at about $90 million. "It isn't like they are going to cut us off if we get to $110 million," Sturiale said. "But it's because they are buying for other clients as well." He said both firms will discuss what happens as the funds' assets increase over the coming year, but the likelihood is that Schwab will have to seek another. The total assets in the target date funds were just under $1 billion at the end of 2005.
Schwab is also planning to change international managers, having dropped INVESCO following personnel changes and poor performance. Erik Granade, who was assigned to the AIM International Core Equity Fund, was promoted and Sturiale expressed concern he would not be able to pay as much attention to the fund in his new role. The new international managers will be Capital Research and Boston Co. Cap Research, Sturiale said, puts about 20-30% of its assets into emerging markets, while Boston behaves a bit more like a value investor, so the combination should work well.
Bill Hensel, INVESCO spokesman, said the firm does not comment on the activities of its clients, and repeated attempts to contact Granade were unsuccessful.