Giants don't pack punch

Andrew Leckey

May 08, 1991|By Andrew Leckey | Andrew Leckey,1987 Tribune Media Services, Inc.

It's difficult for a giant to move quickly.

The nation's biggest stock funds have held their own in 1991, but many of their lumbering blue-chip portfolios have failed to provide the zip that more diminutive funds investing in small-company stocks offer.

Conservative investors, who seek out these massive funds for talented management that protects them from negative surprises, should find the latest double-digit returns perfectly acceptable.

But they shouldn't expect any hefty 30 percent gains.

Among the biggest, $15.2 billion-asset Fidelity Magellan has turned in a strong 20.23 percent gain, thanks to the fact that portfolio manager Morris Smith holds many small-company stocks. That's unusual for a big fund.

Meanwhile, $7.6 billion-asset Windsor Fund has managed an 18.25 percent gain.

Is it difficult to be nimble when your fund is elephant-size?

"The big mental change in portfolio management is moving from $500 million to $1 billion in assets, but beyond that point there's not a big difference," explained Beth Terrana, portfolio manager of the $4.1 billion-asset Fidelity Equity-Income Fund, who last October left the $2 billion-asset Fidelity Growth & Income Fund after five years at its helm.

"I own 300 names in my portfolio and it's a lot of work to track them, but I do have help from more than 60 analysts and Fidelity's other fund managers."

Terrana's fund is up a creditable 13.86 percent, emphasizing inexpensively priced, well-known companies.

For example, she holds stock in Kmart because its management is gradually improving the company; Entergy Corp. because of its huge cash generation and its steps to buy back stock and increase dividends; and Continental Corp. since it's the insurance firm most hated by Wall Street.

"The big funds don't offer the romance of a flashy small fund, but they don't provide ugly losses either," said Don Phillips, editor of the Chicago-based Mutual Fund Values advisory service. "With the tide turning toward smaller-company stocks, the small funds will gain assets more rapidly, but remember that the reasons these well-known funds are so big are the quality of their managers and their long-term performance."

Here, ranked in order of asset size by Mutual Fund Values, are the nation's biggest stock mutual funds and their first-quarter 1991 performances:

Fidelity Magellan Fund, Boston; $15.2 billion in assets; 3 percent "load" (initial sales charge); up 20.23 percent.

Windsor Fund, Valley Forge, Pa.; $7.6 billion; no load, but currently closed to new investors; up 18.25 percent.

Investment Co. of America, Los Angeles; $7 billion; 5.75 percent RTC maximum load; up 12.12 percent.

Washington Mutual Investors, Washington, D.C.; $6.4 billion; 5.75 percent load; up 10.89 percent.

Fidelity Puritan Fund, Boston; $4.7 billion; 2 percent load; up 11.27 percent.

Fidelity Equity-Income Fund, Boston; $4.1 billion; 2 percent load; up 13.86 percent.

Pioneer II, Boston; $4.1 billion; 8.5 percent load; up 11.71 percent.

Templeton World, St. Petersburg, Fla.; $4.1 billion; 8.5 percent load; up 14.67 percent.

American Mutual, Los Angeles; $3.7 billion; 5.75 percent load; up 8.09 percent.

Twentieth Century Select Investors, Kansas City, Mo.; $3.7 billion; no load; up 12.68 percent.

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