On Friday, August 1, Allianz announced a management change at Allianz OCC Value PDLAX. The advisor is ousting Colin Glinsman of Oppenheimer Capital in favor of the Dallas-based dividend-focused team, NFJ Investment Group. Eventually, Allianz hopes to merge the fund into Allianz NFJ Large Cap Value PNBAX.

The fund's recent returns have been atrocious. It's down 27% for the year-to-date, after falling nearly 6% in 2007. Glinsman makes dramatic bets, and in the current market, he has been dramatically wrong. He loaded up on financials and has continued to buy as they've gone down. The fund is in net outflows, which only makes the situation worse.

We'd be remiss, however, not to point out Glinsman's long-term record. Although his tenure at this fund is short -- he took the helm in early 2005 -- he has racked up strong returns at Oppenheimer Quest Balanced QVGIX over his more than 15 years at that fund. That's not to say the Quest Balanced hasn't had its low points--Glinsman's big bets often come early and have made for a volatile ride, particularly in the short term--but we consider him a proven manager even so. 

So the question is, Did Allianz drop Glinsman too soon? The advisor gave Glinsman less than a year to make a comeback, and since he hasn't, they've transferred the money to stronger performers. Maybe that's the best decision in this case, maybe the fund would otherwise continue to plummet for several more years, but I have to wonder if the advisor's timeframe is too short. Even NFJ's funds, which look so good now, will inevitably fall out of favor. NFJ is less aggressive than Glinsman, so maybe Allianz will have more patience with that team, but I certainly wouldn't want to see Allianz drop NFJ after serving less than a year as the market's whipping boy.

Let's hear your thoughts.

Marta Norton, Senior Mutual Fund Analyst

Past performance is not indication of future results.

We cannot have it both ways. On the one end we talk about reversion to the mean. Then on the other end we talk of performance chasers.

People shouldn't chase performance of Bill Miller. So people shouldn't buy LMVTX. Then, people buy LMVTX and "we told you so". Then, but wait, don't lose the faith in Bill Miller because he will come back.

We say don't look at performance or just the start rating. We cite reversion to the mean. Then we say Glinsman is good - just look at his past record. Why? Shouldn't Glinsman have been sold just like Miller should have been sold? Why are we to keep faith in fund managers when they falter, but not sell their fund when they have done too well? Why is it that we are not supposed to buy funds like CGMFX but we never say sell LMVTX or the fund in question?

What about funds like SCMLX and SCMVX? Incredible returns that's why we buy. But wait, let's be selective. Let US decide which managers we like. For THOSE managers let's look at the M* rating and recommend that we buy. For others we don't like, let's not look at the star rating. Then when funds we recommend do badly "keep the faith", but funds we don't like are "risky", and we tell them that. And if the funds we don't like do badly, then "we told you so".

A manager does stop working. Persistence of performance is ONLY persistent until the fund gets noticed. Then CRASH! BANG! Happenned to Miller. Happenned to Schneider. Happenned to Muhlenkamp. Happenned to Nygren. Happenned to NFJ. No wait, did not happen to NFJ. THAT is why Oppenheimer is out and NFJ is in. It is really that simple. No need to do extra analysis.

Nobody can predict the future. No one can say OCC is better/worse than NFJ. Changing manager indicates to shareholders that management is trying to do something constructive besides simply "keeping the faith". If the OCC manager has a stellar record, so does NFJ. And guess who's held up better? OCC or NFJ?