A case could be made... that our friendly warm and fuzzy mutual fund industry has been one of the main drivers of this decline off the March 2002 highs. As redemptions rolled in and gathered steam..., they were required to keep selling stocks in order to meet cash withdrawal demands on dwindling stock values. These vast positions in both cash and stocks holdings are most likely leveraged in some other ingenious manner... which increases the need to unload to meet loan demands and share holder exits.
Interesting game these mutual funds.... 90% don't beat the S&P500... their sold as safe guarantee investments for the long haul..., and the good managers are like farts in the wind, they disappear quickly.
It's like rolling out dough on marble, the more you push the thinner it gets...
the thinner it gets the tougher the dough.
What a racket....!
biz.yahoo.com
Wednesday July 17, 10:30 am Eastern Time
Fidelity's Magellan -2: Net Assets Shrink To '98 Levels
By: Frank Byrt, Of DOW JONES NEWSWIRES
BOSTON -(Dow Jones)- Fidelity Investments' flagship Magellan mutual fund cut its cash allocation by more than half in June, a change that could be related to payouts due to investor redemptions as well as investment strategy changes.
The fund, managed by Robert Stansky, held 3.2% cash as of June 30 , which is down from 6.8% at May 31 , and from 7.3% at March 31 .
The large-cap blend fund, which had $65.6 billion in net assets as of June 30 , has shrunk from $79.5 billion at year-end and its asset size is now back to levels last seen in early 1998.
Some of that is due to declines in asset values due to the stock market's slide as well as redemptions.
According to Alpha Equity Research Inc., Magellan had $518 million in redemptions and $5.5 billion in the declining value of stock in its portfolio, both in June.
Year to date through June 30 , Magellan posted a negative return of 15.1%.
Year to date through July 16 , the fund is down 22.3%. Its benchmark, the Standard & Poor's 500 Index is down 21.5%.
In the second quarter this year, Magellan's allocation to financial sector stocks rose to 22.7% of the portfolio, from 20.8% at March 31 , while it cut its information technology sector holdings to 11.4% from 13.1% at March 31 .
There were no other significant sector allocation changes.
Allocation levels can change due to investment portfolio changes as well as in the value of the underlying holdings. |
