1 Rukeyser newsletter marches on, other limps
Commentary: Mutual funds publication a top performer despite his death
By Peter Brimelow, MarketWatch
Last Update: 12:01 AM ET Jan 8, 2007
NEW YORK (MarketWatch) -- Founder Louis Rukeyser has passed away, but one of the two investment newsletters he founded is marching on. The other is sort of limping on.
Louis Rukeyser's Mutual Funds was the ninth-highest- performing letter when we listed the top letters of 2006, up 25.7% vs. 16.54% the dividend-reinvested Dow Jones Wilshire 5000.
Louis Rukeyser's Mutual Funds was part of an empire capitalizing on the fame of the financial journalist and his long-running television show, "Wall $treet Week with Louis Rukeyser." Rukeyser died in early 2006 after some years of ill-health. But the letter continues, as does its sister publication, Louis Rukeyser's Wall Street Week.
Both are edited by Nicholas Lanyi. But for some reason, Louis Rukeyser's Mutual Funds (LRMF for short) has had a consistently better record, as monitored by the Hulbert Financial Digest, than Louis Rukeyser's Wall Street (LRWS). See Jan. 6, 2003 column
Over the past 10 years, LRMF portfolios have gained on average 10.04% annualized vs. 8.28% for the dividend-reinvested Dow Jones Wilshire 5000. LRWS has gained an annualized 6.99%. LRWS has a relatively poor year in 2006, gaining just 8.38% vs. 16.54% for the total-return DJ Wilshire 5000.
LRMF includes the money-manager interviews that are the staple of LRWS. In the current issue, for example, Tony Proctor of Wellesley, Mass.-based Proctor Financial discusses a recent report that a dramatic increase in average lifespan is about to occur: "the first person who will live to 150 years old is around today." (One recommendation: annuitize assets before insurance companies start adjusting their actuarial tables.)
But LRMF also has a systematic way of selecting mutual funds. And its system seems to be working.
LRMF's "Rukeyser 100" consists of funds that have meet a number of criteria: they must be among the top performs over three years, they must have a combined front-end and back-end load of less than 3%, and they must not have undergone a management change in the last three years. These funds are grouped into categories: "Growth," Taxable Income," Tax-Free Income", etc.
LRMF also highlights a subset of the Rukeyser 100 that have made it onto the list for 80% of the time that the letter has been published. It calls these "Honor Roll." Since LRMF does not offer more specific advice, it is from this Honor Roll that the Hulbert Financial Digest constructs a model portfolio for each sector.
There's a lot of difference, again for some reason that's not immediately obvious, between the performance of this technique in the various categories that LRMF has defined.
For example, LRMF's Growth Portfolio has gained 4.8% annualized since the HFD started following in 1995, half the 9.7% annualized of the DJ Wilshire 5000. In contrast, its top-performing "Specialty Portfolio," which are in the main internationally-oriented with some sector funds thrown in, gained at a 16.6% annualized rate.
Two funds on this list are also on the LRMF's "Honor Roll" and hence are in the Specialty Fund portfolio as constructed by the HFD: US Glbl:Eastern Europe (EUROX) and T. Rowe Price Int:Em Euro (TREMX) .
In its most recent issue, LRMF also added two new funds to its specialty list: T. Rowe Price New Era (PRNEX) and Janus Overseas (JAOSX)
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