BOSTON - Robert C. Pozen is taking mutual funds back to college.
The president and chief executive officer of the world's largest mutual fund company, Fidelity Management & Research Co., has written a university text book, "The Mutual Fund Business". The book is being published June 1 by MIT Press, and will sell for $67 in hardcover and $37.50 in paperback. Mr. Pozen will donate all proceeds to charity.
The book is not light reading on the capital markets, like that written by another Fidelity superstar, Peter Lynch. Mr. Lynch's books - "Beating the Street" and "One Up on Wall Street" - earned him best-seller status.
Still Mr. Pozen's book offers a solid background on the industry.
Each of the 13 chapters introduces a topic, such as trading or portfolio management. Then, each follows up with excerpts from articles about the topic and ends with a detailed case study.
New equity funds outperform
older ones at first
WELLESLEY, Mass. - A study of mutual funds found new domestic equity funds tend to outperform their more mature peers in the first year of their existence, but the advantage is unevenly distributed across asset classes.
The study, by Kobren Insight Group, found new large-cap and midcap funds on average outperform older funds by 2.1 percentage points in their first year. Small-cap funds outperform older funds by an average of 6.9 percentage points. Small-cap growth funds do even better with an average 9.2 percentage point better performance.
This outperformance narrows precipitously as funds age, depending on asset class. Large-cap fund performance over older funds dropped 1.4 percentage points in year two. But midcap funds performed even better in their second year, moving up to 3.5 percentage points of outperformance. Small-cap funds overall dropped to an average of 4.2 percentage points of outperformance in their second year and small-cap growth funds dropped to 7.5 percentage points.
The Kobren Group's study went beyond analysis of average outperformance to calculate the "batting average" of new funds, i.e. what percentage of new funds outperform older funds in their asset class. Results ranged from 50% to 72% across all styles in the first year, and from between 53% to 71% in year two. For the best-performing asset class, small-cap growth funds, the batting average for new funds was 71.7% in the first year and 70.5%, the second.
The universe used for the study was 1,181 equity funds that were started before December 1995 and had at least $25 million in assets.
Fidelity uses Web site
to communicate with managers
BOSTON - Fidelity Investments introduced the FundsNetwork Xchange Homepage to serve the more than 180 managers whose funds are offered through Fidelity's no-transaction fee fund supermarket.
The secure Web site will allow participants to receive information about Fidelity and the network and to communicate back much faster than via existing channels.
ROCKVILLE, Md. - Mutual fund tracker CDA/Wiesenberger entered a joint agreement with InUnity Corp. to offer the latter's Digital Direct Prospectus to its institutional clients. The Digital Direct Prospectus is a fully compliant prospectus that is distributed in electronic form.
The program is especially useful for mutual fund, insurance and bank sales staff who need an up-to-date source of performance and pricing information, as well as semiannual and annual reports. Electronic delivery of mutual fund information is much more cost-effective than print media and less cumbersome, said InUnity officials.
CDA/Wiesenberger will offer the program first to the 100 major mutual fund companies that use customized versions of its software.
*State Street Global Advisors, Boston, introduced four mutual funds: SSgA Special; SSgA International Growth Opportunities; SSgA Real Estate Equity; and SSgA High Yield Bond. They are distributed by Russell Fund Distributors Inc., Boston, for institutional and retail investors.
*The Teachers Insurance Annuity Association - College Retirement Equities Fund, New York, for the third consecutive year, reduced the expenses on four of the variable annuity accounts used by its retirement plan clients. As of May 1, the total annual expense ratio of the CREF Growth Account dropped to 34 basis points from 36; for the CREF Global Equities Fund, to 37 basis points from 38; and for the CREF Equity Index and Social Choice Accounts, fees dropped to 29 basis points from 30.
*Lord, Abbett & Co., New York, introduced the Lord Abbett Securities Trust - World Bond-Debenture Series. The fund will follow the investment strategy of the more than 25-year-old domestic Lord Abbett Bond-Debenture Fund. The fund will invest in high-yield corporate debt, high-grade debt, convertible bonds and emerging market debt. Anne E. Brown, director of fixed income at Lord, Abbett, will lead a team in managing the fund.
*J.P. Morgan & Co. opened a new mutual fund to subscriptions, the J.P. Morgan Global 50 Equity Fund. It will invest in a concentrated global portfolio of the company's 50 best stock picks, as recommended by the company's 85 equity analysts. The mandate allows investments in developed and emerging markets worldwide, using J.P. Morgan's proprietary research. The fund is for retail and institutional investors with a minimum investment of $2,500.
Christine Williamson can be reached at [email protected]