The Columbia Thermostat Fund, a contrarian fund-of-funds managed by Liberty Wanger Asset Management, Chicago, will be available just in time for the first winter cold spell.
The fund has more than a unique name. According to Securities and Exchange Commission filings, the fund will be run by "a single predetermined rule. The temperature in your house is run by a single rule; your thermostat turns on the furnace if your house is too cold or turns on the air conditioner if your house is too warm. The fund works the same way ..."
When stocks are hot, the fund will run cold and own only bond funds. When stocks are depressed, the fund's managers will load up on equity funds. The fund will be 100% invested in bond funds when the S&P 500 index hits 1,600. The fund will be 100% invested in stock mutual funds when the S&P 500 drops to 650. The fund's allocation moves in incremental blocks in between, depending on the level of the S&P 500. When the index is between 1,101 and 1,150, for example, the allocation will be 50% stocks and 50% bonds.
The fund's managers at Liberty Wanger - Ralph Wanger and Charles P. McQuaid - will use eight mutual funds from managers owned by its parent company, Columbia Management Co., New York. They are the Liberty Acorn Fund, the Liberty Acorn Twenty Fund, the Liberty Stein Roe Growth Stock Fund, the Liberty Growth & Income Fund, the Liberty Select Value Fund, the Liberty Federal Securities Fund, the Liberty Stein Roe Intermediate Bond Fund and the Columbia High-Yield Fund. Harvey B. Hirschhorn, manager of the Liberty Stein Roe Balanced Fund, will assist.
The new mutual fund likely will be available by the end of the year, said Marilyn Morrison, vice president of public relations.