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Strategies & Market Trends : Bob Brinker: Market Savant & Radio Host -- Ignore unavailable to you. Want to Upgrade?

To: Diamond Jim who wrote (8021)	9/19/1998 5:05:00 PM
From: Sonki	Read Replies (1) \| Respond to of 42834

Managed vs. index :different results for big vs small caps. Benchmarks hard to beat for big-cap funds By Craig Tolliver, CBS MarketWatch Last Update: 3:38 PM ET Sep 16, 1998 Mutual Fund Center A new study shows actively managed domestic equity funds trailing their indexes. "We'd hoped that managers would come out looking a lot better than they did," said editor Susan Dziubinski of the report in this month's Morningstar FundInvestor. The magazine paired mutual-fund categories with appropriate indexes to measure how funds' performance rated against indexes'. The study separated the past five years into rolling one-year periods and calculated how frequently each category average met or beat its index. It also looked at how categories compared with benchmarks during bear markets, defined as months in which equity indexes lost more than 3 percent. The study found that the average large blend fund simply could not beat the S&P 500 index but may fare better in a bear market. Since there were no sustained 12-month down periods over the past five years, Morningstar measured category vs. index for the shorter periods that bear markets were in effect. In this instance, large blend funds lost less than the S&P 500 in a correcting market. The average large growth fund beat the Wilshire Large Growth index only 2 percent of the time, and the index fared better in down markets. Large value funds beat the Wilshire Large Value index 31 percent of the time and performed better in bear territory. Small-cap funds, on the other hand, did considerably better than large-cap ones. Small growth and value funds were nearly even with their Wilshire counterparts and held up better in bear markets. The average small blend fund beat the Russell 2000 index 100 percent of the time, according to Morningstar. Index pioneer tops S&P 500 list The Vanguard Institutional Index (VINIX) tops the CBS.MarketWatch.com SuperStar Funds top 25 list of S&P 500 funds with a three-year return of 23.6 percent. Investors can buy into this fund with a minimum investment of $10 million. Investors of more modest means can try Vanguard's S&P 500 Portfolio (VFINX), which placed No. 2 with a 23.4 percent return. The buy-in minimum is a much more modest $3,000, and $1,000 will put you into an IRA. Time and time again, you'll hear that the fundamental reason behind Vanguard's success is low fees. There are no loads to get in or out of the funds, and the expense ratio on the 500 index fund is a very low 0.19 percent, way below the industry average. Shareholders are charged an annual $10 maintenance fee, but Vanguard will waive it on accounts with balances over $10,000. Additionally, $10 may be charged annually to accounts falling below $2,500. That's a pittance compared with some fund companies' galling loads or higher expenses on funds that essentially run themselves. See related story. Liberty Freedom recognizes community service The Liberty Freedom Fund presents its 1998 Liberty Torch Awards in Washington, D.C., on Thursday. Ceremonies will take place at the South African Embassy. The awards will be presented to Rep. William J. Jefferson, a Louisiana Democrat; Rep. John Lewis, a Georgia Democrat; Sidney Williams, the U.S. ambassador to the Bahamas; and Thomas W. Dortch Jr., president of 100 Black Men of America Inc. The honor recognizes the recipients' "commitment to providing economic resources and professional support to individuals, business and industry while maintaining a fervent commitment to community service and economic development." The manager of Liberty Freedom Fund is Liberty Bank & Trust Company of New Orleans, the fifth-largest African-American- owned and -operated bank in the country, with more than $165 million in assets and deposits. The Liberty Freedom Fund is a large-cap value mutual fund with the investment objective of growth of capital and providing income.