BOSTON - Mutual fund investors are optimistic about the short- and long-term prospects for the markets, according to the Liberty Financial Investor Reality Check, a survey by Liberty Financial Cos. Inc.
Half of the more than 1,000 retail mutual fund investors surveyed in October said they thought stock prices would remain static for the next six months. Twice as many investors (32%) think stock prices will rise than those who think they will fall (15%) over the same period.
But investors are fickle when it comes to sticking with investment objectives. If a fund drops 20% in value, 84% of investors said they will hold their shares or buy more. But if the stock market drops 25%, 30% said they would think about selling their position in their equity funds.
But investors remained confident about the health of the stock market over the next 10 years. A bit more than half think stocks will rise in the next decade to match the 14% annual return of the prior 10 years; 29% think stocks will achieve better than 14% annually; and 14% who think stocks won't continue to match the 14% growth rate. Only 5% said they thought a drop of more than 30% in a given year would occur in the next decade, and 41% said they think the market will not experience any drops of more than 10% in a year in the coming decade.
Investors seem willing to translate their market confidence into action with regard to privatizing Social Security. Three-fourths of investors surveyed want changes in federal law to allow diversion of least some of Social Security assets into investments of their choice. Seventy-seven percent would invest the allowable portion into mutual funds if permitted.
Despite their interest in mutual funds, most investors said they don't thoroughly read mutual fund prospectuses. Most (74%) said would be more likely to read the information more carefully if presented in simpler, shorter form.
Fidelity uses technical analysis
BOSTON - Fidelity Investments launched a new mutual fund with a computer-driven investment approach that uses technical analysis and artificial intelligence techniques to pick stocks.
Called the TechnoQuant Growth fund, it blends the use of technical variables like price and volume data of stocks and markets with computer-assisted growth-oriented stock analysis using artificial intelligence models to analyze hundreds of technical indicators. The fund, Fidelity's first to use technical analysis as the driving force behind stock selection, is managed by Tim Krochuk. The fund will have very high turnover and may be best suited to tax-exempt investors and tax-deferred retirement plan investors.
TOPEKA, Kan. - The Security Benefit Group of Companies introduced a new socially responsible mutual fund, the Security Social Awareness Fund. The fund is available for defined contribution plans and retail investors.
Portfolio manager Cindy Shields, will invest in companies with positive records in employee relations, community contributions, environmental responsibility and companies that implement policies to benefit working parents. The new fund will avoid companies with substantial environmental remediation liabilities, with significant profits from nuclear or conventional weapons, with nuclear power plant ownership, which produce or distribute alcohol and tobacco or specialize in serving the gambling industry.
Ms. Shields has managed a social investment series for the company's variable annuity and life insurance programs since 1992.
Available for advisers
CLEVELAND - KeyCorp has made its proprietary mutual fund families, the Victory Funds and KeyFunds, available through three mutual fund platforms that serve fee-only financial advisers, greatly increasing distribution potential.
Seventeen Victory funds and three no-load KeyFunds are available through Schwab's Institutional OneSource, Fidelity Institutional Funds Network and DataLynx without transaction fees. Almost all (97%) of financial advisers use one of the three mutual fund platforms and KeyCorp officials anticipate asset growth between $50 million and $100 million to flow into the fund families from these distribution channels in 1997.
KANSAS CITY, Mo. - American Century Mutual Funds has made the Twentieth Century mutual funds available at a reduced management fee to fee-based financial advisers through the Schwab Mutual Fund Marketplace. American Century adopted a new multiple-class pricing structure Nov. 1.
Investors going through financial advisers will be able to buy institutional class shares of the Twentieth Century Select, Heritage, Growth, Ultra, Vista, Balanced, Value, Equity Income, International Discovery and International Equity funds. Fees for the domestic funds will drop to 0.8% from 1%. Financial advisers have to meet minimum investment requirements of $250,000 in aggregate client investments in a single Twentieth Century fund or at least $100,000 from a single client in one fund to be eligible for institutional rates. American Century will continue to offer some of its Twentieth Century funds through Schwab's OneSource program without transaction fees.