WASHINGTON - While the stock market gyrates from one extreme to the next, ICMA Retirement Corp.'s Vantagepoint Growth & Income Fund keeps chugging along.
The fund, offered by the Washington-based manager of managers, has beaten its benchmark, the Standard & Poor's 500 stock index, every quarter since the fund's inception in October 1998.
Not many funds can make that claim over the last three years. In fact, just three mutual funds have beaten the S&P 500 every quarter since October 1998, according to Lipper Inc., Summit, N.J. One of them, MFS' Vertex Contrarian Fund, is available only to employees of MFS Investment Management Co., Boston. That leaves the Vantagepoint Growth & Income Fund and Schroder Capital Management's Ultra Investors Fund as the only two mutual funds to beat the S&P 500 for 11 consecutive quarters, according to Lipper.
The $405 million Growth & Income Fund, which is available only to state and local government employees through defined contribution plans, employs one growth, one value and one core manager, each of which handles one-third of the portfolio. Portfolio newcomer T. Rowe Price Associates Inc., Baltimore, manages the growth portion; Wellington Management Co., Boston, value; and Capital Guardian Trust Co., Los Angeles, core.
Diversification has enabled the fund to navigate the market's sharp shift from growth to value, said John Tobey, chief investment officer at ICMA Retirement. But performance goes only as far as the managers' stock-picking ability takes it. "You can have value, growth, and core, but that doesn't magically give us outperformance. You really need to have top managers," he said.
In April, Mr. Tobey made a manager change, replacing Putnam Investments Inc., Boston, with T. Rowe Price. Putnam had managed the growth portion of the portfolio since inception, but the portfolio's composition had become more defensive and started drifting toward value. "They were diminishing too far the growth aspects that we needed," said Mr. Tobey. When the change was made in April, he said, Putnam was reducing growth exposure at a time when it should have been adding. Putnam spokeswoman Laura McNamara said the firm had no comment on the move.
So ICMA turned to T. Rowe Price and manager Larry Puglia's high-quality growth equity approach.
Mr. Tobey said the addition of T. Rowe Price and Mr. Puglia, who manages the T. Rowe Price Blue Chip Growth Fund, "makes for a really good blend with the other two managers."
Since inception in October 1998, the Vantagepoint Growth & Income Fund has posted an annualized return of 19.5% through June 30, 2001, according to ICMA. During that same period, the S&P 500 returned 9.5%.