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The Best Mutual Fund Families

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					                %    THE DOW JONES BUSINESS AND FINANCIAL WEEKLY                        www.barrons.com             FEBRUARY 4, 2008




                              The Best
                             Mutual Fund
                              Families
                                                                                                                      Waddell & Reed,
                                                                                                                       Eaton Vance,
                                                                                                                      Janus, Hartford
                                                                                                                       and American
                                                                                                                      Century shine in
                                                                                                                       our exclusive
                                                                                                                         rankings.




                                                                                                          Peter Hoey for Barron’s




                                                                                                                                         (over please)

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                                                                   !
The First Family
by Lawrence C. Strauss
The resurgence of growth-oriented equity                                    banks, housing companies and retailers,                                               tion—Barron’s February 4), so many of last
mutual funds finally arrived last year. The                                 and owning the highest-quality bonds. But                                             year’s leaders are now laggards again, with
question is how long it stays. ● Our annual                                 a preference for growth provided the                                                  the S&P 500 having given up 6% since Dec.
Lipper/Barron’s Fund Families Survey,                                       strongest tailwind. ● “Certainly, growth                                              31. All but one of the top five finishers from
which ranks mutual-fund companies based                                     came back in favor and that helped all of                                             last year—Janus—already have fallen from
on their overall performance across a vari-                                 our U.S. growth funds and our internation-                                            that aerie. How this growth-versus-value
ety of asset types, demonstrates just how                                   al funds,” says Enrique Chang, president                                              tussle plays out will be a major fund theme
important a growth bias was in 2007. Wad-                                   and chief investment officer at American                                              in 2008.
dell & Reed, the No. 1-ranked firm out of                                   Century Investment Management. ● Last                                                    There were other ways to the top. Al-
67 companies, third-place Janus Capital and                                 year wasn’t a great one for U.S. equities                                             though not known as a growth house,
fifth-finishing American Century all im-                                    overall, with the S&P 500 notching a mere                                             Eaton Vance came in second for 2007, lifted
proved their standing over 2006 based on                                    5.5% total return. Thus, it didn’t take a                                             by top-tier performance in several asset
their bets on growth shares. There were                                     huge number to beat the crowd, just a                                                 types, including U.S. equity, world equity
other keys to success: Buying stocks of                                     slight tilt in strategy. ● Will growth cede                                           and mixed equity. Fourth went to The
companies with substantial foreign opera-                                   its place? January hasn’t been kind to                                                Hartford, which placed first in the U.S.-eq-
tions, stepping around minefields like major                                growth stocks (See accompanying illustra-                                             uity category owing in no small part to a


2007 Fund-Family Rankings
Waddell & Reed rode strong showings in all five categories to victory while other members in the top tier—Eaton Vance, Janus, The Hartford and American Century—capitalized mostly on their equity-management
prowess in 2007. Firms like AllianceBernstein and Legg Mason that pursue value-equity strategies didn’t fare as well as many growth managers.

                                Total                       FUNDS RANKINGS                                                                                  Total                                  FUNDS RANKINGS
                               Assets Weighted     U.S.   World    Mixed    Taxable Tax-Exempt   Phone                                                     Assets Weighted U.S.                 World      Mixed    Taxable Tax-Exempt      Phone
Rank Fund                        (mil)*  Score   Equity   Equity   Equity     Bond        Bond   Number         Rank Fund                                   (mil)*   Score Equity               Equity     Equity     Bond        Bond      Number
 1.   Waddell & Reed          20826.9    86.04       4        1        2       16          7     888-923-3355   35.    Franklin Templeton             279019.3            50.46        48          32        38          17          16     800-342-5236
 2.   Eaton Vance             38352.6    78.55       5        3        1       23         64     800-225-6265   36.    Touchstone Advisors               6381.9           49.63          6         58        67          35          12     800-304-2459
 3.   Janus Capital           95719.6    78.39       3        8        5       28         67     800-525-0020   37.    Mainstay Funds                   23181.6           49.57        29          48        36          34          54     800-624-6782
 4.   The Hartford            54790.3    73.57       1        5      14        57         65     800-862-6668   38.    T. Rowe Price                  221384.9            49.32        56          34        33          11          28     800-638-5660
 5.   American Century        71679.7    70.05     13         7        9       25         32     800-345-3533   39.    Pioneer Invst Mgmt               33907.9           48.81        46          53        40           3          50     800-225-6292
 6.   State Farm              10289.6    67.71       2      55       42        10          1     800-447-4930   40.    JPMorgan                         67729.2           48.24        42          42         31         40          17     800-480-4111
 7.   Wilmington Funds         2716.5    66.54     27       33         4        8          4     800-336-9970   41.    John Hancock                     72127.3           48.11        50          28        30          32          30     800-225-5291
 8.   Ivy Investment          13161.9    66.44       8      20         3       51         31     800-777-6472   42.    RiverSource Invst                58028.3           47.70        36          49        35          42          45     888-791-3380
 9.   TIAA-CREF               17585.8    66.16     32         9        6       27         19     800-223-1200   43.    Munder Capital Mgmt               7060.1           47.56         21         66         13         58          40     800-438-5789
10.   GE Asset Mgmt           16280.7    65.95     38         2        8       26         51     800-242-0134   44.    Dreyfus/BNY Mellon               80080.5           47.51         17         61        43          44          44     800-426-9363
11.   Pimco/Allianz          218801.9    64.02     10       35       22         1         57     800-426-0107   45.    Guardian                          7896.9           47.35        24          43        59          48          42     800-766-3863
12.   BlackRock               88789.3    63.04     18       17       10        38         43     800-441-7762   46.    Principal Mgmt                   66961.6           46.66        39          22        37          59          55     800-247-4123
13.   STI Funds               13746.9    62.94     34       21       12        12          8     888-784-3863   47.    Oppenheimer Funds              152682.0            45.62        33          60        55          13          66     800-225-5677
14.   MFS                     82036.8    59.21       7      39       27        47         24     800-225-2606   48.    Jennison Dryden                  17500.8           45.62        22          63         51         36          27     800-225-1852
15.   Fidelity               878935.2    58.49     19       31       15        45         10     800-544-8544   49.    Goldman Sachs                    58648.1           45.25        52          19        46          33          60     800-621-2550
16.   Lord Abbett             59223.5    58.33       9      23       41        29         63     800-821-5129   50.    Van Kampen                       75461.2           45.18         51         24        62          20          39     800-847-2424
17.   Fifth Third              5495.3    58.31     35       11       17        39         34     800-282-5706   51.    Phoenix Investment                9675.0           45.08        55          13        28          65          18     800-243-1574
18.   Vanguard               835453.6    58.25     47       15       19         9         23     800-662-7447   52.    AIM Investments                  60596.2           44.61        40          40        39          61          25     800-959-4246
19.   Columbia/BOA             127517    58.05     11       26       21        49         36     800-345-6611   53.    Natixis Global                   74539.3           44.11        65          64          7          4          56     800-225-5478
20.   American Funds         1131114.7   57.25     28         6      26        56         29     800-421-0180   54.    UBS Global                       20694.3           41.70        44          59        53          30          35     800-647-1568
21.   Russell Investments     45010.4    56.41     31       36       18        15         59     800-787-7354   55.    First Investors                   5809.7           41.03         61         12        57          60            5    800-423-4026
22.   Federated Investors     39734.2    55.71     14       16       63        22         49     800-341-7400   56.    Calvert Funds                    13227.9           40.93        30          67        60          19          61     800-317-2274
23.   Allegiant Asset Mgmt     4671.9    55.60     54       30       11         6         15     800-364-4890   57.    Legg Mason                     130509.7            39.92        60          25        29          67            2    800-451-2010
24.   Wells Fargo             40584.9    55.25     26       50       20        24         21     800-222-8222   58.    Charles Schwab                   32166.3           39.92        43          37        52          62          62     800-308-1486
25.   FAF Advisors            16676.6    55.21     25       56       16        18         46     800-677-3863   59.    AllianceBernstein                74492.7           39.91        49          62        50          37          13     800-221-5672
26.   Highmark Capital         2629.3    54.96     53         4      58         5          3     800-433-6884   60.    Dimensional                      84326.3           39.34        59          27        45          54          41     310-395-8005
27.   Nationwide              13246.9    53.40     37       51       34         7         20     800-848-0920   61.    Commerce Invst                     1306.4          39.07        66          29        44           2          22     800-995-6365
28.   Thrivent Financial      13876.7    53.06     16       54       23        53         11     800-847-4836   62.    USAA Investment                  24142.9           37.91        58          44        48          50          58     800-531-8181
29.   AIG                      9555.3    52.95     20       52       25        46         33     800-858-8850   63.    Delaware Mgmt                    21667.6           35.77        63          46        66          21          52     800-523-1918
30.   Morgan Stanley          45959.9    52.82     23       38       24        52         38     800-869-6397   64.    Northern Trust                   15826.1           35.25        57          47        54          64          26     800-595-9111
31.   Nuveen Asset Mgmt       13562.8    52.65     45       14       49        14         47     800-257-8787   65.    DWS Scudder                      48862.5           35.19        64          45        47          55            9    800-621-1048
32.   Evergreen               42118.0    50.91     41       18       32        41         37     800-343-2898   66.    SEI Group                        32271.8           25.78        62          65         61         63          53     800-342-5734
33.   Seligman Funds           2920.8    50.90     15       10       65        66          6     800-221-7844   67.    Putnam Investments               76589.0           24.24        67          57        64          31          14     800-225-1581
34.   ING Investments         15547.3    50.62     12       41       56        43         48     800-992-0180   Note: Note: Asset totals reflect open-end, long-term funds; among the categories excluded from the survey are money funds, ETFs, S&P
                                                                                                                500 index funds, single-country funds, region-specific funds and single-state bond funds. Note: In several instances, funds under the same
                                                                                                                corporate umbrella are listed separately. Example: the Morgan Stanley and Van Kampen funds. *As of 12/31/07
                                                                                                                                                                                                                                                Source: Lipper
strong performance by its funds subadvised
by Wellington Management.                         The Best Families Over Five Years …
    A value bias or poor execution of a           Although its performance cooled last year, Bank of America unit Columbia Management remains the
growth strategy hurt a lot. Household             leading fund complex for the five years through the end of 2007.
names like Legg Mason (ticker: LM), Put-
nam Investments and Franklin Templeton             Rank    Family                    Weighted Score   Rank    Family                 Weighted Score
(BEN) all fared poorly in 2007, dragged
down by relatively weak performing funds.            1.    Columbia/BOA                    71.26        32.   JPMorgan                     55.24
    Our rankings are based on asset-weight-          2.    Oppenheimer Funds               71.01        33.   Charles Schwab               55.19
ed returns in five categories: domestic equi-
                                                     3.    The Hartford                    70.36        34.   Phoenix Investment           54.96
ty; world equity (including international
                                                     4.    Janus Capital                   70.17        35.   STI Funds                    54.82
and global portfolios); mixed equity (stocks
and bonds); taxable bonds and tax-exempt             5.    Eaton Vance                     68.48        36.   Goldman Sachs                54.50
funds. Domestic equity has the largest               6.    Vanguard                        67.67        37.   Russell Investments          53.92
weighting, at nearly 49%, so strong perfor-          7.    Ivy Investment                  67.33        38.   American Century             53.30
mance there will boost a fund family’s rank-         8.    Munder Capital                  66.99        39.   Wells Fargo                  52.66
ing. Conversely, a poor showing may over-
                                                     9.    Pimco/Allianz                   66.45        40.   Van Kampen                   52.45
whelm better performance elsewhere.
                                                     10.   Jennison Dryden                 66.03        41.   GE Asset Mgmt                51.56
    The fund-family rankings also take into
account an individual fund’s performance             11.   Legg Mason                      65.01        42.   Lord Abbett                  51.46
within its Lipper peer group. Here too a             12.   T. Rowe Price                   64.85        43.   DWS Scudder                  51.38
fund’s size comes into play because the re-          13.   Fidelity                        64.76        44.   AllianceBernstein            50.53
turns are asset-weighted. If a fund firm’s           14.   American Funds                  64.48        45.   Evergreen                    49.62
largest U.S.-equity portfolio underper-
                                                     15.   BlackRock                       63.31        46.   AIM Investments              49.06
forms, that will hurt its overall ranking—
                                                     16.   Mainstay Funds                  62.09        47.   Natixis Global               48.47
and vice versa.
    Rounding out the top 10 over one year            17.   Guardian                        62.08        48.   Allegiant Asset Mgmt         47.74
were State Farm, whose performance was               18.   AIG                             61.46        49.   Dreyfus/BNY Mellon           47.17
lifted by State Farm Growth Fund (ticker:            19.   Franklin Templeton              61.46        50.   FAF Advisors                 46.37
STFGX), in sixth place, followed by Wilm-            20.   State Farm                      61.11        51.   Delaware Mgmt                46.14
ington Funds. Ivy Investment, which is
                                                     21.   MFS                             60.67        52.   USAA Investment              44.53
part of Waddell & Reed, came in at No. 8,
                                                     22.   Nationwide                      60.44        53.   Thrivent Financial           41.30
ahead of TIAA-CREF and GE Asset Man-
agement, last year’s winner.                         23.   Waddell & Reed                  60.35        54.   Seligman Funds               40.20
    The changed economic environment                 24.   Federated                       60.03        55.   SEI Group                    39.74
claimed more than a few victims. Delaware            25.   Morgan Stanley                  59.79        56.   Northern Trust               39.54
Management, whose U.S.-equity funds                  26.   Touchstone                      59.31        57.   Fifth Third                  38.77
lagged, tumbled all the way from No. 4 to
                                                     27.   Principal Mgmt                  59.26        58.   First Investors              38.26
63, fourth from the bottom. While disap-
pointed with that performance, Delaware              28.   RiverSource Investments         59.07        59.   Putnam Investments           35.99

says in a statement that distinguished long-         29.   ING Investments                 58.27        60.   Calvert Funds                35.37
term performance stems from a willingness            30.   UBS Global                      56.71        61.   Commerce Investment          34.13
to invest away from the pack.                        31.   Pioneer Investment              55.47                                          Source: Lipper
    RiverSource Investments, third a year
ago, dropped to 42; it finished in the bottom
half of all five categories. Franklin Temple-     lowed by Oppenheimer Funds, The Hart-                  Vanguard finished at No. 18. American
ton, which came in fifth in 2007, slid to 35 as   ford, Janus and Eaton Vance.                        Funds came in 20th, helped by a sixth-place
its U.S. equity performance suffered.                The 10-year crown went to American               showing in the world-equity category.
    A disappointing result came from Balti-       Funds, a repeat winner, followed by                    Aside from a strong tailwind for growth
more’s Legg Mason, which fell to 57 from          Pimco/Allianz, thanks partly to Bill Gross          stocks, foreign shares, or U.S. companies
23. Legg Mason Value Trust (LMVTX),               and his successful taxable fixed-income             with sizable foreign operations, helped push
which Bill Miller has run since 1982, fin-        team; GE Asset Management, Janus and                performance.
ished at the very bottom of its category,         The Hartford.                                          At Waddell & Reed Financial (WDR),
losing 6.7% last year. Another Legg unit,            How did the giants of the fund business          based in Overland Park, Kan., analysts and
bond manager Western Asset Manage-                do? Over one year the three biggest U.S.            portfolio managers blend a macro view with
ment, struggled with its exposure to riskier      fund firms—Fidelity, Vanguard and Ameri-            fundamental analysis of individual compa-
credits. Legg finished 67th, or last, in the      can Funds—turned in solid performances.             nies. “Every day we try to look at the
taxable-bond category.                            Fidelity, some of whose marquee funds               world from 50,000 feet and drill down to in-
    Of course, longer time horizons are a         such as Magellan (FMAGX) have done bet-             dividual stocks,” says Mike Avery, the chief
fairer test for portfolio managers than a         ter of late, placed 15th. Magellan, with            investment officer at the Waddell & Reed
one-year window. Winning the five-year            about $45 billion in assets, returned 18.8%         and Ivy Investment Management compa-
ranking was Columbia Management, which            last year—in the top 20% of its category.           nies. (Waddell funds are sold exclusively by
is owned by Bank of America (BAC), fol-           The fund recently reopened to investors.            the in-house sales team made up of about
                                                                                                                                                           Janus, which finished third, has been on
 ...And the Leading Fund Clans for the Last Decade                                                                                                      a roll. This comes after a horrible stretch
 Performance does matter. The American Funds group, which has attracted more than $1 trillion in assets,                                                early in this decade when the asset manag-
 is the No. 1 fund family in returns over 10 years through December 2007, by Lipper/Barron’s estimates.                                                 er, having loaded up on technology stocks,
                                                                                                                                                        got pummeled. The Denver firm has beefed
  Rank        Family                         Weighted Score               Rank      Family                                Weighted Score
                                                                                                                                                        up its research staff with more experienced
                                                                                                                                                        hands to cover some 1,250 stocks, up from
   1.         American Funds                         85.23                 27.      Delaware Mgmt                                  55.01
                                                                                                                                                        about 500 several years ago, and has added
   2.         Pimco/Allianz                          84.17                 28.      Pioneer Investment                             54.74                expertise in areas such as energy and in-
   3.         GE Asset Mgmt                          79.80                 29.      Phoenix Investment                             53.88                dustrials. “It’s a team that is broader and
   4.         Janus Capital                          78.32                 30.      STI Funds                                      53.31                deeper,” says Jonathan Coleman, co-chief
   5.         The Hartford                            77.43                31.      Evergreen                                      52.08                investment officer.
                                                                                                                                                           The investment seems to be paying off,
   6.         Natixis Global                         76.77                 32.      Federated                                      50.82
                                                                                                                                                        considering that Janus also placed in the
   7.         Franklin Templeton                     76.71                 33.      Charles Schwab                                 49.78
                                                                                                                                                        top five in our five- and 10-year rankings.
   8.         Fidelity                               75.96                 34.      AIG                                            49.51                   The most recent rap on Janus is that it
   9.         Waddell & Reed                         75.07                 35.      Calvert Funds                                  47.88                can’t hold onto key portfolio managers, in-
   10.        T. Rowe Price                          73.73                 36.      Goldman Sachs                                  47.62                cluding Scott Schoelzel, who ran Janus
   11.        Oppenheimer Funds                      73.64                 37.      AIM Investments                                46.10
                                                                                                                                                        Twenty (JAVLX) for a decade, turning it
                                                                                                                                                        around after the bad patch amid the tech-
   12.        Eaton Vance                            73.33                 38.      DWS Scudder                                    46.09
                                                                                                                                                        nology-stock wreckage. He has been re-
   13.        Van Kampen                             70.08                 39.      Russell Investments                            45.57                placed by Ron Sachs, a veteran who ran
   14.        MFS                                    70.07                 40.      Dreyfus/BNY Mellon                             45.47                Janus Orion (JORNX) for seven years.
   15.        Ivy Investment                         69.13                 41.      AllianceBernstein                              44.94                   A departure that raised eyebrows last
   16.        BlackRock                              68.72                 42.      Northern Trust                                 44.93                year was that of David Corkins, a talented
                                                                                                                                                        young investor who ran the flagship Janus
   17.        Columbia/BOA                            67.84                43.      UBS Global                                     43.50
                                                                                                                                                        Fund (JANSX) for less than two years.
   18.        Morgan Stanley                         66.94                 44.      FAF Advisors                                   43.18
                                                                                                                                                        Minyoung Sohn, who managed Janus Fun-
   19.        Legg Mason                             66.91                 45.      RiverSource Investments                        41.60                damental Equity (JAEIX), also left.
   20.        American Century                       66.25                 46.      Thrivent Financial                             40.61                   Karen Dolan, a Morningstar analyst,
   21.        Mainstay                               65.64                 47.      Putnam Investments                             38.46                says the departures “raise questions about
   22.        Lord Abbett                            64.97                 48.      USAA Investment                                38.04
                                                                                                                                                        the sustainability” of performance.
                                                                                                                                                           “We recognize that we have to prove
   23.        Vanguard                               64.86                 49.      SEI Group                                      34.82
                                                                                                                                                        ourselves every month, every quarter and
   24.        JPMorgan                               61.38                 50.      First Investors                                33.58                every year,” says Coleman, maintaining
   25.        Wells Fargo                            58.58                 51.      Fifth Third                                    31.52                that Janus has a deep enough bench and in-
   26.        Munder Capital                         58.55                 52.      Seligman Funds                                 22.46                vestment culture to groom managers.
                                                                                                                               Source: Lipper              Second-place Eaton Vance is not as tied
                                                                                                                                                        to growth investing as Janus but still man-
2,600 people; the Ivy Funds, which are                                   on finding opportunities overseas, even                                        aged to climb high in the one-year rank-
nearly identical to those in the W&R line-                               among U.S. companies.                                                          ings—fifth in U.S. equity, third in world eq-
up, are sold via Smith Barney and other                                     David Ginther, who runs the Ivy Divi-                                       uity and first in mixed-equity funds.
third parties.)                                                          dend Income (IVDAX) and Waddell &                                                 Remarkably, in light of the growth bias,
   The firm has tried to focus on “the idea                              Reed Dividend Income (WDVAX) funds,                                            one of its successful funds last year, Eaton
that growth is going to come from the                                    looks for companies benefiting from “major                                     Vance Dividend Builder (EVTMX), is cate-
emerging middle class outside the U.S.,”                                 infrastructure plays throughout the world,”                                    gorized by Lipper as a multi-cap value of-
says Avery. Hence, there’s been more focus                               including Fluor (FLR) and Deere (DE).                                          fering. Co-managers Judith Saryan and


U.S. Equity Funds                         World-Equity Funds                          Mixed-Equity Funds                             Taxable-Bond Funds                         Tax-Exempt Bond Funds
The Hartford’s subadviser Wellington      W&R profited from its global                Eaton Vance succeeded with its                 Fixed-income star Bill Gross put           State Farm topped everyone in the
Management had good growth gains.         approach; GE also did well.                 hybrid funds.                                  Pimco/Allianz on top again.                muni-bond arena.


Rank    Best U.S. Equity Funds    Score   Rank Best World-Equity Funds      Score     Rank     Best Mixed-Equity Funds     Score     Rank Best Taxable-Bond Funds       Score   Rank Best Tax-Exempt Bond Funds   Score
  1.    The Hartford              41.84     1.   Waddell & Reed             17.41         1.   Eaton Vance                 15.20        1.      Pimco/Allianz           13.84     1.   State Farm                  2.91
  2.    State Farm                40.40     2.   GE Asset Mgmt              17.38         2.   Waddell & Reed              15.14        2.      Commerce Investment     13.78     2.   Legg Mason                  2.89
  3.    Janus Capital             40.29     3.   Eaton Vance                16.52         3.   Ivy Investment              14.94        3.      Pioneer Investment      13.25     3.   Highmark Capital            2.87
  4.    Waddell & Reed            40.08     4.   Highmark Capital           16.18         4.   Wilmington                  14.69        4.      Natixis Global          13.21     4.   Wilmington Funds            2.63

  5.    Eaton Vance               36.90     5.   The Hartford               16.03         5.   Janus Capital               14.60        5.      Highmark Capital        12.91     5.   First Investors             2.60

Rank    Worst U.S. Equity Funds   Score   Rank Worst World-Equity Funds     Score     Rank     Worst Mixed-Equity Funds    Score     Rank Worst Taxable-Bond Funds      Score   Rank Worst Tax-Exempt Bond Funds Score

 63.    Delaware Mgmt             16.45    63.   Jennison Dryden             2.42      63.     Federated Investors          2.43       63.      SEI Group                3.62    63.   Lord Abbett                 0.24

 64.    DWS Scudder               14.66    64.   Natixis Global              2.06      64.     Putnam Investments           1.89       64.      Northern Trust           3.43    64.   Eaton Vance                 0.22

 65.    Natixis Global            14.14    65.   SEI Group                   1.82      65.     Seligman Funds               1.46       65.      Phoenix Investment       2.86    65.   The Hartford                0.17

 66.    Commerce Investment        7.99    66.   Munder Capital              1.36      66.     Delaware Mgmt                0.97       66.      Seligman Funds           2.66    66.   Oppenheimer Funds           0.09

 67. Putnam Investments            6.38    67. Calvert Funds                 0.70      67.     Touchstone Advisors          0.62       67.      Legg Mason               1.54    67.   Janus Capital               0.06
                                                                                                                                                                                                             Source: Lipper
Charles Gaffney have the flexibility to in-        the world and mixed-equity categories.              funds,     including     Putnam     Voyager
vest in growth stocks, no doubt helping rel-           Coming in fifth was American Century,           (PVOYX), whose 5.3% return trailed 90% of
ative performance. The fund’s 2007 total re-       which in recent years had not done well in          its peers. Last week, Putnam announced a
turn of 22.9% bested 99% of its peers.             our survey thanks to the lousy environment          management shakeup at Voyager.
    “We are primarily value investors, but         for growth funds, especially those with a               In a statement, Putnam says that it’s
we are open to companies that have the op-         large-cap focus. CIO Chang, however, at-            getting good long-term results in fixed in-
portunity to grow their dividends at an            tributes two-thirds of the firm’s strong 2007       come, global-asset management and curren-
above-average rate,” says Saryan, who              performance to stock selection. For the             cies. But “we are intently focused on im-
along with Gaffney is broadening the fund’s        most part, the portfolios avoided companies         provement to a few of our largest equity
scope beyond a pure play on utilities.             like Countrywide Financial (CFC), which             funds where we are changing investment
    Like other successful managers last            has taken a big hit in the subprime housing
                                                                                                       teams and process so that we can meet in-
year, Saryan and Gaffney for the most part         debacle. That theme, says Chang, actually
                                                                                                       vestor expectation across all asset classes,”
stayed away from financials, though they           originated from American’s fixed-income
                                                                                                       it adds.
are giving them a closer look these days.          team, which realized that housing-related
    Fourth-place finisher The Hartford,            “credits were becoming poorer and poor-                 Other firms that fared poorly in the one-
which uses Wellington as a subadviser for          er.”                                                year ranking were Northern Trust (64),
its equity funds, finished first in the U.S.           Two large-cap growth funds that stood           DWS Scudder (65) and SEI Group (66),
equity category owing to strong showings           out: American Century Ultra (TWUAX),                which fell from sixth place a year earlier.
by funds like Hartford Growth Opportuni-           which outperformed 89% of its competitors               SEI, which uses subadvisers to run
ties (HGOAX), which gained 28.3% last              with a 22% return last year, and American           funds of funds, says it “has confidence in
year and bested 93% of its peers. Michael          Century Global Growth (AGGRX), whose                our ability to deliver long-term perfor-
Carmen has run the multi-cap growth fund           20% return was better than 85% of its rivals.       mance acceptable to investors within the
for many years.                                        Dead last in 2007 was Putnam. The main          context of their goals.”
    The Hartford also acquitted itself well in     culprit: a poor showing in the U.S. equity              Maybe next year. n



   How We Rank the Families
   TO QUALIFY FOR THE Lipper/Barron’s Fund Survey, a group must have at least three funds in Lipper’s general U.S.-stock category, as
   well as one in world equity, which combines global and international funds. We also require at least one mixed-equity fund, which holds stocks
   and bonds. Fund shops also must have at least two taxable-bond funds and one tax-exempt offering.
      Each fund’s returns are adjusted for 12b-1 fees, which are used for marketing and distribution expenses. The funds usually add these fees
   back into returns. Our aim is to measure the manager’s skill. Fund loads, or sales charges, aren’t included in the calculation of returns, either.
      Each fund’s return is measured against those of all funds in its Lipper category, such as, say, small-cap value. That leads to a percentile
   ranking, with 100 the highest and 1 the lowest, which is then weighted by asset size, relative to the fund family’s other assets in its general
   classification—world equity, for instance. If a family’s biggest funds do well, that boosts its overall ranking. Poor performance in a big fund
   obviously has a big effect on the ranking.
      Finally, the score is multiplied by the weighting of its general classification, as determined by the entire Lipper universe of funds. The cat-
   egory weightings for the one-year results: general equity, 48.6%; world equity, 18.0%; mixed equity, 15.5%; taxable bond, 15.0%; tax-exempt
   bond, 3.0%.
     The scoring: Say a company has a fund in the general U.S. equity category with $50 million in assets that accounts for half
   of the company’s assets in that category. Its ranking is the 75th percentile. The first calculation would be 75 x 0.50, which
   comes to 37.5. That score is then multiplied by 48.7%, general equity’s overall weighting in Lipper’s universe. So it would be
   37.5 x 0.487, which totals 18.3. Similar calculations are done for every fund in our study. Then, all the numbers are added up
   for a total score. The fund shop with the highest score wins, both for each category and overall.
     The same process is repeated for the five- and 10-year rankings as well. — L.C.S.

				
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