Newspaper article THE JOURNAL RECORD

In the Fund Business, Prosperity Abounds

Newspaper article THE JOURNAL RECORD

In the Fund Business, Prosperity Abounds

Article excerpt

NEW YORK -- Should the mutual fund industry ever go looking for a theme song, Everything's Coming Up Roses would be a worthy candidate. The financial reports coming out of most mutual fund management companies these days truly resound with success and prosperity.

Even the Boston giant Fidelity Investments, which has drawn a lot of negative attention lately, "struggled" through a 1996 in which the assets it manages grew by $91.4 billion, or 22.6 percent, to $496.3 billion. For a case study of just how rosy things have grown, consider the 1996 results recently reported by T. Rowe Price Associates -- a major fund firm with publicly traded stock that obliges it to disclose a lot of information about how it is doing. This is the management company at Price that we're talking about now, as distinct from the 60-plus funds that Price advises, each of which is owned by its own investor-customers (hence the name "mutual fund"). The revenues of T. Rowe Price Associates Inc., or the dollar flow into the company (mainly from advisory fees) before expenses, taxes and other outlays, soared 33 percent last year from 1995 to a record $586 million, more than double the total of just four years earlier. Net profits, after expenses and other costs, jumped 30 percent to $98 million, or about $1 for every $1,000 in assets under the firm's management as of the end of 1996. That profits-to-managed-assets ratio, by the way, is one that has held relatively steady over the past decade or so, even as both total profits and assets under management have more than quadrupled. The ripple effects of Price's prosperity would make good raw material for a stump speech on the virtues of capitalism. Any short list of the beneficiaries would have to include Price's suppliers and those who sell the firm time and space for advertising; its employees as well as its top managers, and its shareholders. Last but definitely not least, there is the U.S. Treasury. The company said its spending for advertising and promotion increased 67 percent in 1996 over the year before. …

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