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Rating:August 14, 2000 Not Rated 3.0 Email Routing List Email & Route  Print Print
Monday, August 14, 2000

August 14, 2000

Reported by Sean Hanna, Editor in Chief

Bank funds are on an ebb tide
From Wall Street Journal
You've read it before; bank mutual funds lack the performance of their peers. Now shareholders in these funds are noticing and heading for the doors, according to the influential "Heard on the Street" column. Net sales into bank funds this year stand at a paltry $1.33 billion. "The typical bank-run U.S. stock mutual fund, however, is a poor performer, badly lagging behind the mutual-fund industry average last year and off so far this year, as well," says the articles. It reports that outflows are "especially bad" at SunTrust Banks and First Union. Investors have pulled nearly $800 million from SunTrust's STI Classic stock and bond funds (it has $8.9 billion) and $1.3 billion from First Union's Evergreen stock and bond funds (they manage a total of $40 billion). One bank success story is Bank of America's Nations Funds which have pulled in $4.6 billion. The article blames banks conservatism and lack of technology in their funds for their current woes.

Putting a positive spin on Craig's Departure
From Barron's
Barron's argues that Jim Craig's departure from Janus may not have a fallout on the firm's investment performance. The article points to the example of Peter Lynch's retirement from Fidelity and Fidelity's continued ascension after that event. Of course, the article overlooks factors in Fidelity's success that Janus lacks. Unlike Janus, Fidelity built a distribution channel for the retirement market with $100 million plus annual investments into its 401(k) recordkeeping and administration systems. It also built a brand name brokerage operation and fund supermarket. Janus, meanwhile, has relied primarily on its strong performance for distribution rather than building a nuts-and-bolts, get-your-hands-dirty network. The article points to a couple "positive developments that could help keep Janus on top." One is group dynamics. Janus' managers are now free to evolve their strategies to "better adapt to changing market climates, if need be." The second is the "greater sharing of Janus' considerable wealth." In short, Janus can use Craig's equity stake to incentivize the remaining managers.

German investors seek service
From Wall Street Journal
Service, not low fees, is what German's value in funds. Of course, this is not a surprising finding in a land of the Mercedes that prides itself on craftsmanship over cost. The Invesco survey of 34 institutional investors with $45 billion in assets says "German institutional investors place the highest value on first-rate customer service, strong reporting methods and an ability to communicate clearly with investors." Meanwhile "professional fees and the reputation of the company were of middling concern." On the investors wish list is more transparency. Most of these institutions sill manage the bulk of their assets themselves, but that may be changing: More than two-thirds said they would increase the amount of money administered externally by the end of next year.

Don't overlook your 401k
From Detroit News
Start investing through your 401(k) today, is the message of this article. In this age of declining pensions, the 401(k) is "the most powerful weapon in your retirement arsenal," says the article. It adds that many people are making the "most obvious error" of not participating in their plan. Other mistakes are "borrowing unnecessarily against the plan and failing to roll over 401(k) funds into another tax-qualified retirement vehicle upon leaving a job," it says.

Of Interest
  • The Detroit NewsProfiles the Domini Social Equity Fund.
  • International technology funds are now the rage, reports the Wall Street Journal. T. Rowe Price and J.P. Morgan plan funds for the Fall. 

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