New mutual funds are popping up like spring bulbs.
A mutual fund based on the Dow Theory has been launched by Edward J. Hennessy Inc., a small money management firm in Novato, Calif., with $30 million in assets.
The balanced fund invests half its assets in equal weightings among the 10 highest yielding stocks in the Dow Jones Industrial Average. The other half is in one-year Treasury bills. Every year, the stock names are changed to reflect the new high yielding stocks. The theory says that the 10 highest yielding stocks will outperform the 30 stocks in the Dow as a whole. Based on back tests, the strategy would have produced a 13.1% average annual return over the past 23 years, almost identical to the DJIA's return, but with less volatility. The fund's expense ratio is a steep 1.9% but Mr. Hennessy expects it to fall as assets grow.
The first open-end mutual fund to invest in former Warsaw Pact countries has been launched by Vontobel USA, an affiliate of Zurich-based Vontobel Group.
The Vontobel Eastern European Equity Fund, the fourth Vontobel no-load fund, will invest in Central and Eastern Europe with particular emphasis on Hungary, the Czech Republic, Slovakia and Poland.
Berger Associates Inc., Denver, launched a fund that attempts to keep up with new technological developments. The Berger New Generation Fund has a broad mandate: to invest in any size companies in any sector anywhere worldwide. The only requirement is that the company have the potential to significantly change the way we live or do business. Not only will it buy technology companies, but also firms with household names.
United Services Fund, San Antonio, Texas, introduced the China Region Opportunity, a no-load, open-end fund with a minimum investment of $1,000.
SEI Corp., Wayne, Pa., launched a series of tax-managed asset allocation portfolios designed to maximize after-tax returns for investors' taxable accounts.
SEI's four portfolios combine active and passive global equities with tax-free municipal securities. The portfolios, which use SEI's no-load mutual funds as the underlying investments, are sold through registered investment advisers and trust departments.
Putnam Investments, Boston, introduced two mutual funds, Putnam New Value Fund and Putnam Diversified Income Trust II. New Value seeks out-of-favor stocks, while Diversified Income II invests in multiple sectors of the bond market and maybe a small portion in equities. Unlike Diversified Income Trust, the new fund buys investment-grade corporates and has a lower allocation to foreign and U.S. government bonds. It also has a higher allocation to high-yield corporates.
Bankers Trust Global Investors, a division of Bankers Trust Co., New York, launched a family of 10 mutual funds that will be sold by brokers, financial advisers and other financial intermediaries.
These are the first load funds sponsored by Bankers Trust and run by Bankers Trust Global Investment Management.
In addition, the firm launched its first family of annuity funds mirroring its existing retail mutual funds.
Bankers Trust will seek insurers to provide the wrapper and distribute the products. The first funds in the BT Insurance Funds Trust are small-cap and international equity funds.
As for the new mutual funds, initially the six actively managed load funds and four no-load index funds will be marketed under the newly created BT Advisor Funds umbrella.
The active funds, which carry sales charges, are: small cap; capital appreciation (midcap); international equity; Latin American equity; Pacific Basin equity; and global high yield.
The no-load passive funds are: BT Equity 500, a Standard & Poor's 500 Stock Index fund; a Morgan Stanley Capital International Europe Australasia Far East index fund; small-cap index, replicating the Russell 2000; and U.S. bond index, replicating the Lehman Aggregate Bond Index.
The minimum investment is $2,500.
John Hancock Funds, Boston, introduced a global fund that invests in stocks of innovative retailers around the world.
The $1.1 million Global Marketplace Fund logged a 40.02% return (not excluding sales charges) from its test launch in September 1994 through Dec. 31, when it was open only to Hancock employees in Massachusetts.
The average global fund earned 16.05% over the period, according to Lipper Analytical Services, Summit, N.J.
2 funds closing
In an unusual move, T. Rowe Price Associates Inc., Baltimore, closed its Small-Cap Value fund to new investors - except participants in employer-sponsored retirement plans. After briefly reopening the fund to new investors in January 1995, assets rose to more than $1 billion from $410 million.
And separately, The Artisan Small Cap fund, run by Carlene Murphy Ziegler, closed to new investors 11 months after its inception.
Assets totaled $300 million as of Feb. 29.
Ms. Ziegler was with Strong Funds before she and her husband co-founded Artisan Partners, Milwaukee, last spring.
Mutual fund changes
TOPEKA, Kan. - Security Benefit Group has waived all or part of the management fees during 1996 for four mutual funds in an effort to enhance performance and attract investor assets.
The waivers, retroactive to Jan. 1, are for: Limited Maturity Bond; U.S. Government; Asset Allocation; Global Aggressive Bond Fund and Global Aggressive Bond Series.
JACKSONVILLE, Fla. - Barnett Bank is going no-load with its proprietary Emerald Funds. The $3.4 billion funds will charge a higher 12(b)1 fee to motivate sales representatives. The combined 12(b) 1 and service fee will be 0.5%.
CLEVELAND - Roulston & Co. relaunched its mutual funds and expanded marketing and distribution efforts. The funds, previously called the Roulston Family, were renamed the Fairport Funds.
The firm may create or acquire new funds to distribute under the Fairport banner and plans to launch an Internet site.
According to Scott D. Roulston, president and chief executive officer, its goal is to amass $1 billion in assets by 2000.
The firm manages more than $600 million mainly for institutions.
Introduced in July 1993, the three Fairport funds - Growth and Income, Midwest Growth and Government Securities - have $90 million.
HOUSTON - The $68.6 million AIM Strategic Income Fund, a closed-end fund, will be acquired by the $1.62 billion AIM High Yield Fund, an open-end fund, by the third quarter, pending approval of the closed-end fund's shareholders.
A I M Advisors expects the acquisition to boost the value of the shares of AIM Strategic Income, which have been trading at a discount.
In the transaction, which will be tax-free to shareholders of both funds, closed-end fund shareholders will receive an amount of shares in AIM High Yield equal to the net asset value of their former holdings.
JERSEY CITY, N.J. - The Pershing division of Donaldson, Lufkin & Jenrette is offering its brokerage correspondents FundVest, a no-transaction-fee mutual fund program that enables users to consolidate no-load mutual funds in one centralized brokerage account.
The customer can invest in more than 200 no-load funds and other investment products in one place. Previously, Pershing charged customers for the service.
Mutual fund trades will be reported on one consolidated monthly statement and an annual tax statement reflecting consolidated activity in all investment products.
The minimum purchase is $5,000 or $1000 for individual retirement accounts.
Closed-end funds make out
Investors in closed-end emerging markets funds have benefited far more from the huge rally in emerging markets than investors in open-end mutual funds.
In January, when a flood of money hit emerging markets, closed-end fund returns reflected not only the rally in those markets but also the increased demand for shares in the funds themselves.
Because closed-end funds issue a fixed number of shares, an increase in demand translates directly into a higher share price.
The average Pacific stock mutual fund posted a 7.4% return for the month of January. By contrast, the average closed-end market price return was nearly double, 13.8%.
Among Latin American mutual funds, the average return was 13.6% in January vs. 17.6% for closed-end funds.
Despite a year of widening discounts among closed-end funds, "recent events have made it clear that a closed-end fund can sometimes provide a more potent short-term pop than a mutual fund," said Gregg Wolper, editor of Morningstar Closed-End Funds, Chicago.
"That possibility in itself is a good reason for just about everyone to consider closed-end funds when making their investment choices," he added.