MILPITAS, Calif. - The Technology Value Fund from Interactive Investments Inc. became only the second mutual fund since 1980 to post consecutive years with returns of better than 60%, according to Lipper Analytical Services Inc., New York.
To date, only the Fidelity Overseas Fund has achieved the same feat.
With a 60.91% return, TVF was the best-performing no-load mutual fund in Lipper's one-year rankings of all categories of equity funds in 1996. Its 1995 return was even better - 61.17%. The fund has provided investors with a 56.69% return since its inception on May 20, 1994.
TVF is the only science and technology fund based in Silicon Valley, and according to Interactive, the only fund managed by two former technology executives. Ken Kam was co-founder of Novoste Corp., a manufacturer of advanced cardiac catheters; co-portfolio manager Kevin Landis previously managed new product development at S-MOS Systems, a semiconductor developer. The managers attributed the stellar returns to deep their knowledge of the technology sector.
The $45 million fund's portfolio includes stocks like S-3 Inc., Novellus Systems Inc., Cirrus Logic Inc. and C-Cube Microsystems Inc.
Social investing coup
BOSTON - Investing with a social conscience was no detriment to good returns for the Green Century Balanced Fund, managed by Green Century Capital Management Inc.
The environmental fund, which returned 25.01% for the year, was ranked second among all 277 U.S. balanced funds for 1996 by Lipper Analytical Services Inc., New York. The average U.S. balanced fund return in 1996 was 13.73%.
Morningstar Inc., Chicago, ranked the Green Century Balanced Fund the No. 1 domestic socially responsible mutual fund for 1996.
The fund invests only in companies that have minimized their impact on the environment and companies proactive in environmental protection. Green Century Capital was founded by the Fund for Public Research, a coalition of environmental advocacy groups based in Boston.
Managers of the year
CHICAGO - Shelby Davis, Joe Deane, Hakan Castegren and Nick Adams were awarded 1996 Manager of the Year honors by Morningstar Inc.
Managers were selected for their demonstrated skill in consistent delivery of long-term performance gains.
Mr. Davis won the domestic equity manager award. He is manager of the Davis New York Venture Fund and Selected American Shares funds, which returned 26.54% and 30.74% (non-adjusted) for 1996. The New York Venture Fund beat the Standard & Poor's 500's 20.33% in 1996, marking its 17th index-beating year out of the last 20 years.
The fixed-income manager winner was Mr. Deane, manager of the Smith Barney Managed Municipals Fund and Smith Barney California Municipals. Morningstar's editor, Amy Arnott, said in her awards report that Mr. Deane is one of the few fixed-income managers who admits to making interest rate bets and is one of even fewer managers to make accurate bets. The California fund is one of the best performing funds of its category over the past 10 years with a 7.79% return and the Managed Municipal Fund is the top national municipal fund over the last five years with a return of 8.98%.
Mr. Castegren received the award for management of the Harbor International Fund and the Ivy International Fund. Both funds have been in the top quartile of the foreign stock funds in eight of nine years. The Harbor fund returned 20.12% for 1996 and the Ivy fund, 19.72%.
Mr. Adams was named closed-end manager of the year for management of the First Financial Fund, a specialty financial sector fund.
Morningstar usually avoids naming sector fund managers as award winners, but Mr. Adams' 44.53% annualized return over the five years beat every other fund in its class. Morningstar also commended Mr. Adams for his straightforward shareholder communications.
Changes for Flex-funds
DUBLIN, Ohio - R. Meeder & Associates Inc. redesigned the investment mandate and renamed its Flex-funds Growth Fund, now known as the Flex-funds Highlander Fund.
Investment of the fund was changed Jan. 1 to an externally managed domestic equity fund with an emphasis on the S&P 500 from an internally managed, defensive asset allocation fund, said Robert S. Meeder Jr.
Sector Capital Management L.L.C., Memphis, Tenn., assumed management of the newly designed growth equity fund, which has a minimum asset allocation of 70% S&P 500 stocks and a maximum of 30% in stocks outside the index.
The portfolio is designed to be sector neutral by dividing investments in 10 distinct sectors - capital goods, consumer durables, consumer non-durables, energy, finance, health, materials/services, technology, transportation and utilities.
The Highlander fund is the first mutual fund Sector Capital will manage in its proprietary style, which was developed by President William L. Gurner during his tenure as the manager of trust investments for Federal Express Corp., Memphis. Mr. Gurner and his team apply the same style and use the same underlying portfolio managers used at FedEx for management of $125 million in separate accounts for institutional investors.
Eight managers manage the 10 sectors, including the Mitchell Group, Dreman Value Advisors Inc., Ashland Management Inc., Miller/Howard Investments Inc., Hallmark Capital Management Inc., RCM Capital Management and Barrow, Hanley, Mewhinney & Strauss Inc.
Alliance Capital Management L.P. will assume management of the health care sector portfolio around April, said Mr. Gurner, who declined to identify the departing manager. He said the change will be made because the manager began to invest in companies outside of core health care holdings.
Mr. Gurner said the emphasis on sector investing ensures no overlap in the stock holdings of each manager, which is a specialist in its particular sector.
The Flex-funds Highlander Fund is a no-load fund available to institutional and individual investors. There are five Flex-funds in the mutual fund family.
PIMCO combines 2 groups
PIMCO Advisors L.P. combined its retail and institutional mutual funds under one umbrella to form a single fund complex, the PIMCO Funds, with $24 billion in assets and 40 funds.
The change will enable retail investors to buy shares in formerly institutional funds like PIMCO Total Return Fund, the largest taxable domestic bond fund.
It also will decrease operating expenses incurred by retail investors in PIMCO's taxable bond funds. In addition, PIMCO will adopt a unified administrative fee structure for the formerly retail funds, setting fixed advisory and administration fees in place of the current fluctuating expense ratios.
BOSTON - Quadra Capital Partners L.P. launched the Forum Quadra Funds, a family of institutional mutual funds.
Quadra, a firm that functions as an operating entity for its affiliated firms, will market the funds and is using its four affiliated managers as subadvisers.
The $100,000 minimum investment is aimed at foundations, endowments and small institutions that don't meet the minimum account of other managers, said Eileen Delasandro, Quadra's managing director. The family features money market, value equity, opportunistic fixed-income, limited maturity bonds and international stock funds.
Ms. Delasandro said Quadra also may add asset allocation funds using combinations of its managers and will add more selections as the firm adds more affiliates.
Quadra's current affiliates are Anhalt-O'Connell, Los Angeles; Carl Domino Associates L.P., West Palm Beach, Fla.; McDonald Investment Management Inc., Toronto; and LM Capital Management, La Jolla, Calif. Ms. Delasandro said the firm expects to add another two affiliates in 1997.
Other new offerings
Franklin Templeton Distributors Inc., San Mateo, Calif., introduced three strategic asset allocation funds, the Conservative, Moderate and Growth Target Funds. The funds-of-funds will pursue the stated investment objective of a lifestyle fund through investment in other Franklin Templeton mutual funds for institutional and retail investors.
Warburg, Pincus Counsellors Inc., New York, launched the Warburg Pincus Strategic Value Fund, under the direction of managing director Anthony G. Orphanos.
Brian S. Posner, managing director and a recent emigre from Fidelity Investments, assumed portfolio management responsibility for the Warburg Pincus Growth & Income funds.
Montgomery Funds, San Francisco, introduced the Montgomery Global Asset Allocation Fund, a strategic asset allocation fund. The fund allocates assets among other Montgomery-managed mutual funds in five asset classes.
T. Rowe Price Associates Inc., Baltimore, introduced its third fund in the Spectrum series of funds-of-funds, the Spectrum International Fund. The balanced fund will invest in up to nine other T. Rowe Price foreign stock and bond funds, with the T. Rowe Price International Stock Fund forming the core allocation with about 50% of assets.
Rowe Price-Fleming International, London, is the fund's manager.
Paul Barr and Marlene Star contributed to this column.