MutualFundWire.com: Odd Lots, February 2, 2000

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Wednesday, February 2, 2000

Odd Lots, February 2, 2000

NYSE trades up
From The Wall Street Journal
The New York, German and Tokyo stock exchanges are teaming up with Standard & Poor's to introduce the first globally traded index fund. The fund will be based on a new global index of 100 stocks, and may be the first such index to be traded on several exchanges. The fund will also mark the NYSE's first foray into the booming business of index-based securities that are like mutual funds but trade like stocks. Exchange-traded funds are priced and traded throughout the day. The American Stock Exchange has enjoyed considerable success with these funds.

Growing pains
From CBS Marketwatch.com
Small-cap fund managers are facing growing pains. "A lot of great names that used to fall into the small-cap category have moved quickly up to mid and large-cap status." says Phil Fine, co-manager of Loomis Sayles Small-Cap Growth fund. In particular, small tech companies quickly boom into large-cap companies because of investor demand, a frustrating trend for small-cap fund investors who are essentially being punished for getting in too early. It's also frustrating to fund managers, who hate being forced to sell their most successful companies.

Also featured in:
The New York Times

Marsico launch
From Morningstar
Today, Marsico Funds launches its third fund, an "all-cap" offering which will have an expense ratio of about 1.72%, capped at 1.5% at least until next year. Unlike other Marsico funds, it will be managed by someone other than the company's founder, Tom Marsico. James Hillary, a senior analyst, will hold the reins.

Gus Sauter, Vanguard visionary
From Morningstar
Gus Sauter, manager of the Vanguard 500 Index fund, has regularly beaten his benchmark, the S&P 500 index. How does he do it? Using software that he helped develop, he uses futures to get Vanguard the best prices. Before Vanguard buys stocks, Sauter checks the futures market. If he sees a bargain, he buys it. "We tend to accumulate futures over the quarter," he says. "At the end of the quarter, the futures contracts expire, and we merely invest the cash position supporting the futures contracts in the stocks." Futures usually represent no more than 2% of his portfolio, and he does not use them to speculate on the direction of the market or to leverage the fund. In true Vanguard fashion, Sauter trumpets index funds, and contends that all actively managed funds tend to revert to the mean over time.

Value Line's Manager of the Year
From ValueLine
Value Line's 1999 Fund Manager of the Year is Garrett Van Wagoner, the "comeback kid." A few years ago, Van Wagoner was considered one of the best stock pickers in the business after a tremendous three-year stint at Govett Smaller Companies Fund. He received a warm welcome when he opened his own shop at the end of 1995. But his funds tanked when the small-cap market went south in 1996. Van Wagoner held his ground and toughed out 1997 and most of 1998. By the final quarter of 1998, Van Wagoner began his climb back to the top. By 1999, all five of his funds posted tremendous gains, and his comeback was secure. Van Wagoner’s funds are actively managed, and do not track any particular index. They are heavily invested in technology.

New TIAA-CREF funds
From The Los Angeles Times
TIAA-CREF is launching five new funds for cost-conscious investors. The funds will be a municipal bond fund, a short-term bond fund, a high-yield bond fund, a "socially conscious" fund and a fund that tracks the Russell 3,000 index. The new offerings will have relatively low fees and a minimum investment requirement of only $250. The combination of low fees and low minimums helped TIAA-CREF's funds pass the $2-billion mark by year-end.

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