DJN: =SMARTMONEY.COM: A Bullish Signal?
By Hayley Green, Elizabeth Harris and Dawn Smith
NEW YORK (Dow Jones)--The market may not be doing well, but the fund
business is booming. Money flowed into stocks and bonds in record amounts in
April, rising 22% from last March to $26.50 billion, according to
Boston-based Financial Research Corp. That figure is up 26% from inflows in
April 1999. For the first quarter of this year, FRC calculates that mutual
funds received inflows of $96.10 billion, compared with $75 billion for the
same period a year earlier. It is suspected that April's sales increase was
due to last minute IRA funding. The most popular sectors in April were
growth, which received $11.90 billion in new money, and technology, which
got $4 billion, down dramatically from the record $11.50 billion raised in
March.
Amerindo: Almost Nothing but Net
When your Internet-heavy technology fund is down 44.6% year-to-date, you
launch a business-to-business Internet fund, right? You do if you're Alberto
Vilar, manager of the Amerindo Technology fund (ATCHX). On May 30, Amerindo
will launch its Internet B2B fund and a Health and Biotechnology fund.
While many former Internet bulls have been taking cover lately, Vilar is
confident that the market will prove him right in the future. In five to
seven years, he expects 50% of B2B transactions to be conducted via
e-commerce, accounting for 20% of the economy. But don't expect progress
overnight. "We think we're at the bottom of the first inning," Vilar said
during a conference call Thursday.
Notably, Vilar expects the portfolios of the Technology and Internet B2B
funds to overlap by up to 60% - a good warning to investors who want to
diversify in this space. What stocks does Vilar like at the moment? In
yesterday's call, he mentioned Akamai (AKAM), Ariba (ARBA), Exodus
Communications (EXDS), HomeStore.com (HOMS), Inktomi (INKT), Priceline.com
(PCLN), Sycamore Networks (SCMR) and Verisign (VRSN).
Don't think Amerindo is edging away from the Internet with its Health and
Biotechnology fund. Vilar notes that the new endeavor will focus on genomics
and Internet health-care companies, specifically "the Healtheons of the
world." He expects these companies to take off in the next one to three
years. That's a relief, as Healtheon/WebMD (HLTH) is down 64% year-to-date.
Firsthand Information
Firsthand Funds says it is going to start holding back portfolio
information. In a letter to investors, the fund company says that as its
business grows "we are becoming more concerned about something called 'front
running,'" the practice of trading stock with knowledge that some event will
push the stock before the fund company completes a transaction. To prevent
information from getting into the wrong second- and third-hands, the fund
company, which publishes its full portfolio holdings monthly, says it will
extend its delay period before publication from one month to two months
starting in June.
Manager Moves
Hot on the heels of Beth F. Terrana's departure from three Fidelity funds,
including the Fidelity fund (FFIDX), the firm will lose another senior
manager when Margaret Eagle retires June 28. Eagle, who has worked at
Fidelity for 20 years, manages the Fidelity Advisor High Yield fund (FAHDX).
She'll hand over the reins to Thomas J. Soviero, who has managed Fidelity
High Income fund (SPHIX) since 1996. In his place, Frederick D. Hoff, Jr.
will take over Fidelity High Income. Hoff has managed the high-yield
portions of a number of Fidelity's asset-allocation funds, as well as
high-yield funds designed for Japanese and Canadian investors.
Berger Funds also lost a top-performing manager, but gained a new chief
investment officer. Amy Selner, who ran Berger's Small Company Growth fund
(BESCX) and Mid Cap Growth funds (BEMGX), is leaving. Meanwhile, Jay W.
Tracey is joining Berger as its chief investment officer. He previously
managed the Oppenheimer Enterprise fund (OENAX). Tracey has already been
tapped to serve as an interim manager of Berger's Small Company and Mid Cap
Growth funds. He will be assisted by Mark Sunderhuse.
You Share, iShares
Barclays launched another round of iShares, its index-tracking,
exchange-traded funds, or ETFs. The ones introduced Friday all track Dow
Jones Indexes. The iShares Dow Jones U.S. Internet Index (IYW), iShares Dow
Jones U.S. Technology Index (IYW), iShares Dow Jones Financial Sector (IYF)
and iShares Dow Jones U.S. Telecom Sector (IYF) will be priced at .60%.
The competition among index-tracking mutual funds and ETFs funds is becoming
fierce. Expenses are dropping across the board. State Street Global Advisors
just cut annual expenses from .56% to .28% on nine of its sector ETFs
including basic industries, consumer services, consumer staples,
cyclical/transportation, energy, financial, industrial, technology and
utilities. Meanwhile, Vanguard announced two weeks ago that it plans to
introduce its own exchange-traded funds.
Best and Worst
Fidelity Investments' and Vanguard's largest funds continue to vie for first
place in terms of size. And this week, the Vanguard 500 Index fund (VFINX)
weighed in as the largest fund with a heft of $104,798,800,000, topping
Fidelity Magellan fund (FMAGX), which has $104,606,000,000 in assets,
according to Lipper. The two funds have been neck and neck for some time,
with Fidelity in the lead. But Vanguard and Fidelity fund watchers announced
that Vanguard had unseated Fidelity briefly in early April according to
their "proprietary calculations." Too bad the funds' returns haven't been as
substantive as their assets. The Vanguard 500 Index is down 5.6% for the
year with Magellan behind 6.3%.
Speaking of performance, natural resources funds continued their strong run
and led the week, returning 14.67% so far this year. The group is rising
with energy prices and the threat of inflation. Small-cap and biotech funds
are in second and third place, rising 13.3% and 12.95%, respectively, in
2000. The China trade bill didn't give China funds much of a pop. In spite
of the country moving a step closer to entry into the brave new world of fre
e trade, China funds fell an average 6.62% in the week.
SMARTMONEY.COM'S QUOTE OF THE WEEK
"Taxes are a controllable cost. Why not control those things you can,
instead of trying to predict those things that are uncontrollable, namely
market returns."
- Joel Dickson, a tax-efficiency expert at Vanguard
For more information and analysis of companies and mutual funds, visit
SmartMoney.com at smartmoney.com
(END) DOW JONES NEWS 05-26-00
05:17 PM
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