Looking for the Gray-Haired Fund Mangers
Jan 09, 2001, 12:58 PM ET
By Jack Crooks
Previously scoffed at and scorned by wet–behind–the–ears fund managers of the New Economy, value investing has returned with a vengeance. In a dicey market, one that can go down as well as up, the gray hairs may have a distinct advantage over the cocky young Turks.
"People had no sense of valuation in the highflying, tech–happy late 1990s, and that had to change," Neil T. Eigen, who runs a total of $5.3 billion in value funds at J. & W. Seligman & Co., told The Wall Street Journal.
"Graybeards like me stayed the course because we've seen manias before and they always end badly," Eigen said. "You want to invest in companies with proven records of product, earnings, cash flows and dividends, and these are value stocks."
Stick to your knitting if you know it works, in other words. Fashions and fads come and go, but value never seems to go out of style.
Legendary among value fund managers, John Neff, former manager of the Windsor fund for 31 years, listed these as his principle elements of value investing in his book, John Neff on Investing:
· Low price–earnings (p/e) ratio
· Fundamental growth in excess of 7 percent
· Yield protection (and enhancement, in most cases)
· Superior relationship of total return to p/e paid
· No cyclical exposure without compensating p/e multiple
· Solid companies in growing fields
· Strong fundamental case
Below is a list of large cap value funds with managers that have been at the helm for at least 10 years, ranked by net assets:
Vanguard Windsor II (VWNFX)
MSDW Dividend Growth S (DIVBX)
Legg Mason Value Prim (LMVTX)
Lord Abbett Affiliated (LAFFX)
T. Rowe Price Equity–I (PRFDX)
Source: Morningstar
American Funds Going After Financial Planning Customers
Bloomberg reported that American Funds is seeking to capitalize on the increasing reliance on financial planners, and plans to offer a new class of shares that carry no sales charge but can only be bought through professional financial advisers.
American, the country’s third–largest group U.S. mutual fund company with more than $300 billion in assets, will begin offering "Class F" shares through fund supermarkets, such as Charles Schwab, in March.
More EFTs, This Time in the Bond Category
Morningstar reported yesterday that Barclays intends to roll out several exchange–traded funds (ETFs) that will mimic the performance of well–known Lehman Brothers bond indexes, according to filings this month with the Securities and Exchange Commission. |
