And the Winner Is: Mr. Slowpoke Growth-and-Income Funds Hit the Finish Line

By Guy Halverson, writer of The Christian Science Monitor | The Christian Science Monitor, June 12, 1997 | Go to article overview

And the Winner Is: Mr. Slowpoke Growth-and-Income Funds Hit the Finish Line


Guy Halverson, writer of The Christian Science Monitor, The Christian Science Monitor


A record-breaking stock market sometimes brings record-breaking pressure to pick a mutual fund that keeps pace, but the winning strategy often lies elsewhere.

Sometimes the best way to win, especially when the race gets frantic, is to saddle up the tortoise - a performer that lacks the razzle-dazzle but crosses the finish line time after time.

If that rings true, growth-and-income funds belong in your mutual fund stable. Long considered the plain vanilla enterprises of mutual funds, they bring respectable returns and impressive security. "High-diddle-diddle, right down the middle," quips Michael Lipper, president of the financial data firm Lipper Analytical Services in New York. "Growth-and-income funds tend to be less extreme, they have lower risk ... and they do quite well over time," says Mr. Lipper But with their investments in blue-chip companies, these conservative funds mean rich rewards in the current bull market. They've gained more than 14 percent a year for the past five years, according to the Value Line Mutual Fund Survey. And in any market climate, these war-horses of the industry should make up the core of a typical retirement portfolio, many experts say. Investors are clearly infatuated. Since 1984, the growth-and-income category has consistently ranked No. 1 or No. 2 at the equity-fund box office, in terms of new investor dollars. The attraction stems in part from the popularity of funds that track the Standard & Poor's 500 stock index. Growth-and-income funds, including S&P index funds, won the new-money race in 1987, 1989, 1992, 1993, 1995, and 1996, according to industry statistics. And they have a good shot at the top this year. Growth-and-income funds have two goals: growth in share-price and regular income checks for their investors. They invest mainly in shares of large companies with steady profit gains and consistent dividend payments. Often a portion of the portfolio includes bonds. For most investors, G&I funds "are the most comforting category of mutual funds," says Sheldon Jacobs of the No-Load Fund Investor in New York. If you want something more conservative, you have to go "with a bond fund or a money-market account." Many G&I funds now invest heavily in bonds, Mr. Jacobs says. …

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