NEW YORK -- If you've been very good, you might just receive mutual fund shares from an institutional money manager this holiday season.
With a mere $500 minimum investment, you or your loved ones can be the recipient of shares of any of the 36 BlackRock Funds. The minimum is only $50 if you're lucky enough to have a benefactor who intends to make on-going monthly payments into the new account.
The gift includes an "elegant" certificate and an account statement in the name of the recipient. BlackRock suggests in a sales pitch for the service that the gift is "ideal for the special someone who has always wanted to start a nest egg, plan for retirement or save for an extra special something but hasn't had the resources or knowledge to begin."
Since name recognition may be a little low among your loved ones, you may want to point out on your gift card that BlackRock manages $118 billion for institutional and retail investors across asset classes and is a defined benefit plan manager for more than half of the companies in the Fortune 100, if you decide to give rather than hope to receive.
Fixed-income lineup shifts at Strong
MENOMONEE FALLS, Wis. -- Strong Capital Management's reorganization led to several changes in fixed-income portfolio management duties. Lyle Fitterer will move to head institutional client relationship and account management.
His position as fixed-income comanager of the Strong Advantage Fund was filled by Tom Sontag, previously a managing director at Bear Stearns. Jeff Cook will remain the fund's other comanager.
John Bender will replace Mr. Fitterer as a comanager on the Short-term Bond Fund; he will continue to manage the Strong Corporate Bond Fund.
Mr. Sontag replaces Mr. Bender on the Strong Government Securities Fund.
Also, Strong Funds introduced a new boutique of mutual funds from eight outside money managers: Marsico; Acorn; Fasciano; Ariel; Oakmark; Baron; Rainier; and Warburg-Pincus. The prime managers service offers 37 funds from the outside managers and 42 managed by Strong on a no-load, no-transaction fee basis, with a $5,000 minimum investment. Performance and fund information is provided to investors through Morningstar.
Active or index; index or active?
ROCKVILLE, Md. -- It's official. Even a major mutual fund researcher can't settle the debate over which is better -- indexed equity mutual funds or actively managed equity mutual funds.
CDA/Wiesenberger tried to settle the debate by crunching the numbers. Short-term, since January 1994, passive funds based on the Standard & Poor's 500 index are up more than a cumulative 144%, compared with 82.3% for the average active U.S. equity fund.
Year-to-date (as of Oct. 31), index funds are up 13.7%, compared with 0.06% for the average active equity fund.
Index funds historically have performed better than active funds in volatile markets, as they have this year, CDA/Wiesenberger's data showed. During the last extended bear market in 1990, S&P 500 funds lost 2.8%, while active funds lost more than 6%. In all of the down markets during the past 20 years, active funds only outperformed S&P 500 funds in 1987 (2.7% vs. 2.2%, respectively) when the index fell 28% between September and November.
But during the past 20 years, CDA/Wiesenberger found active U.S. equity funds on average outperformed S&P 500 funds. The average annualized return for active U.S. equity funds since January 1978 is 15.7%, compared with 15.3% for S&P 500 funds. If the universe of active equity funds is narrowed further, large-capitalization growth funds beat S&P 500 funds in 12 of the past 20 years.
The average annualized return for domestic growth funds since 1978 is 16.5%, almost one percentage point higher than S&P 500 funds over the same period.
The jury remains out on the index vs. active mutual fund question, concluded CDA/Wiesenberger's report.
Investors report shifts since August
KANSAS CITY -- About one-third of mutual fund investors reported making changes to their investments or strategy since August, a consumer poll from the Mutual Fund Education Alliance shows.
More than half of the more than 2,000 people responding to the Web-based Investor Pulse Survey said they have made no changes. Only 2.5% said they redeemed funds.
About 55% of respondents said they were worried about the market, but 32% said they were not concerned. Some 85% said they will invest more in stocks or at least remain where they are.
2 Mercury funds make their debut
NEW YORK -- Merrill Lynch & Co. Inc. introduced two funds managed by its newest subsidiary, Mercury Asset Management.
As the first Mercury funds available to U.S. investors, the new offerings attracted $679 million during the initial offering period in September and October, despite market turbulence and investor unease.
The Mercury Pan-American Growth Fund will invest primarily in European companies, and the Mercury International Fund will invest in companies worldwide, exclusive of the U.S. More Mercury funds are on the drawing board.
Christine Williamson may be reached at [email protected]