Star portfolio manager Michael F. Price said he will close temporarily any of the five mutual funds he manages for Franklin Templeton Distributors Inc., San Mateo, Calif., if inflows push the cash position up into the high 20% range.
Mr. Price said in an interview that his five funds tend to hold 5% to 20% in cash. His largest fund, the $7.5 billion Mutual Shares Fund, for example, now has 20% cash, which Mr. Price described as "typical."
He said his investment management team can handle high cash inflows because it always has a plethora of investment opportunities on the table. Still, he has closed Mutual Shares temporarily three times since its inception.
Mr. Price manages a total of $21 billion in mutual fund assets.
Since selling his company, Heine Securities, Short Hills, N.J., and mutual funds to Franklin Templeton last year, Mr. Price has been hitting the road, talking to his new buying audience - brokers, investment advisers and financial planners. He was interviewed while in Chicago for a road show.
Franklin Templeton added a sales load to the Mutual Shares series of funds, effectively limiting retail distribution to broker/dealers, who weren't very familiar with Mr. Price's funds when they were still offered on a no-load basis. Defined contribution plan investors with more than $1 million to invest still have access to the Mutual Series Funds without 12B-1 fees or sales charges, a company spokesman said.
Mr. Price said he is committed to increasing the assets under management in funds he manages, since his five-year contract includes an incentive bonus based on asset levels.
But some observers point out the irony of an employment contract that encourages Mr. Price to accumulate assets while simultaneously granting him the ability to close funds if he gets more cash than he can handle.
Mr. Price said he hasn't decided what he will do when his five-year contract expires.