Behind Fund-House Mirrors after a Quarter of Record Highs for Stocks, Here Are Rankings and Profiles of How the Largest Fund Families Are Faring

By Guy Halverson, writer of The Christian Science Monitor | The Christian Science Monitor, July 10, 1997 | Go to article overview

Behind Fund-House Mirrors after a Quarter of Record Highs for Stocks, Here Are Rankings and Profiles of How the Largest Fund Families Are Faring


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


Crave excitement? Seek drama? Envision glittering prizes to win or gold to gain?

Welcome to the carnival-like world of mutual funds, where grand promises are made, high-tech wizards of finance become portfolio-manager superstars, and small investors can dream of wealth.

And like a sprawling fairground, it's often disorienting. Sales pitches and publicity can make it hard to narrow the field from the thousands of funds available to the few you need. Financial advisers generally don't recommend solving the problem by sticking to only one fund family. "No one family ... has the best {funds} in all categories," says Kirk Kazanjian, president of Wall Street Advisors in Tulare, Calif. But many investors like the feeling of a "home base," a main group where they feel comfortable with both investing style and performance record. With that in mind, the Monitor asked Morningstar, the Chicago fund-tracking service, to crunch some overall performance numbers on the 20 biggest fund families. That, combined with the family profiles in this article, may help you navigate around the mutual fund state fair. This is a world where big is not necessarily bad and where giant companies dominate the investment landscape. Consider: For the past five years, Fidelity Investments, the world's largest mutual fund family, was also the top performer of the 20 biggest fund houses. But, as if to remind investors that the less-known and smaller fund families can post impressive returns, Massachusetts Financial Services (MFS) tied Fidelity for first place, with five-year returns averaging 19.64 percent for US stock funds. The two Boston rivals are a study in contrasts: Fidelity, the big-name group with slick TV marketing and a reputation for grooming star managers, and MFS, with a less-than-catchy name and a consensus-oriented style. MFS ads remind TV viewers that it started the nation's first mutual fund in 1924. In third place, and also just shy of matching the Standard & Poor's 500 stock index, was T. Rowe Price of Baltimore, which Fidelity and MFS beat by only a nose. For the first half of 1997, the hottest family is another Boston-based fund group, Scudder, with domestic equity funds up a little over 15 percent. The competition among fund families is leading to consolidation. Scudder is being bought by the Zurich Group of Switzerland, which will merge it with another big fund group it owns - Kemper of Chicago. So you really can't know the players without a scorecard. It's probably wise, in fact, to use several scorecards. The rankings used in this article are just one way to assess performance. Franklin Templeton, for example, won top honors in a Feb. 3 ranking by U.S. News & World Report, while faring the lower half of the Monitor's rankings. Franklin Templeton is known mostly for fixed-income and foreign-stock funds, both of which were excluded from the Monitor survey. U.S. News included these categories and factored in risk and fees as well as returns. Another ranking, in the June issue of Mutual Funds magazine, lists fund groups according to how their offerings compared with funds having similar objectives. T. Rowe Price and MFS led the way among big-20 firms in that survey, followed by Fidelity, American, Vanguard, and Putnam. Often, the largest companies in terms of assets (money invested) are also the best performers. They got big precisely because they did an outstanding job in meeting investor needs. But if you focus only on the biggest families, you'll miss out on successful fund houses such as Neuberger & Berman, Strong, and Muhlenkamp. With that caveat, here are short profiles of the largest mutual fund families, based on information from funds and analysts. The big brokerage houses - Merrill Lynch, Dean Witter, Smith Barney, Prudential, and Van Kampen American Capital (a unit of Morgan Stanley) - are discussed in a separate story. Fidelity Investments Phone: 800-544-8888 Assets: $439 billion Call it mighty Fidelity, the powerhouse of the mutual fund industry. …

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