Financial services funds turn out to be stars of 1992

Andrew Leckey

October 09, 1992|By Andrew Leckey | Andrew Leckey,Tribune Media Services

What goes around, comes around. Mutual funds emphasizing the once-downtrodden financial services stocks have been transformed into the stars of 1992, posting a 17 percent average gain.

Meanwhile, once-mighty Japanese funds have tumbled 18 percent and previously adored health and biotechnology funds have dropped 17 percent.

The nation's stock mutual funds averaged just a paltry 0.04 percent increase in the first three quarters of 1992, somber evidence that even a low-yield passbook account was a better deal.

"Many banks and savings and loans are almost coming back from the dead, especially in New England," observed Michael Lipper, president of Lipper Analytical Services, which tracks the nation's funds. "I don't, however, believe financial services can sustain such incredible returns throughout the fourth quarter."

Three years ago, Fidelity Select Savings & Loan Portfolio was among the nation's worst performers. This year it's leading the pack with a gain of 30.34 percent. "I keep the Lipper results from 1989 on my wall to serve as my humbling stick," said David Ellison, portfolio manager of that fund since its inception in 1985.

"The S&L industry is cyclical and you buy when things are horrible and sell when things are good, rather than hold 10 years." Favorite holdings are Pamrapo Bancorp in New Jersey, Norwich Financial in Connecticut and Quincy Savings Bank in Massachusetts. He's avoiding California thrifts.

"It's been a good year for bank earnings, credit costs are coming down and there have been acquisitions, making this a good year for bank stocks," explained James Schmidt, portfolio manager of Freedom Investors Regional Bank Fund "B," up 27.65 percent to notch third place.

"I think current interest margins will be sustained through the fourth quarter, but it's difficult to predict beyond that."

Best-performing stocks included takeover targets Society for Savings Bancorp in Connecticut and First Federal of Fort Myers, Fla. He recently added First Commercial Corp. of Arkansas, Plains Spirit Financial Corp. in Iowa and HUBCO Inc. in New Jersey.

The second-ranked fund, Harris Associates Oakmark Fund, gained 29.03 percent by taking a more eclectic approach, emphasizing low-priced stocks of companies with management that holds a lot of company shares. It had a 17 percent holding in financial services companies.

"The great percentage of my own assets are in this fund, because I think a shareholder should look to me to have the same attitude that I have toward the securities I put in the fund," said Robert Sanborn, Oakmark portfolio manager. "We also avoid over-diversification and think independently." Its largest position, cable holding company Liberty Media Corp., has been a big gainer. Other holdings include Philip Morris Cos. and snowmobile-maker Arctco Inc.

Top-performing stock funds through the first three quarters of 1992, according to Mr. Lipper, were:

* Fidelity Select Savings & Loan Portfolio, Boston; $94 million in assets; 3 percent "load" (initial sales charge); $2,500 minimum initial investment; up 30.34 percent.

* Harris Associates Oakmark Fund, Chicago; $76 million in assets; no load; $1,000 minimum; up 29.03 percent.

* Freedom Investors Regional Bank "B," John Hancock Group, Boston; $80 million in assets; no load, but 4 percent back-end load declining over six years; $1,000 minimum; up 27.65 percent.

* Fidelity Select Regional Banks Portfolio, Boston; $195 million in assets; 3 percent load; $2,500 minimum; up 25.17 percent.

* Fidelity Select Automotive Portfolio, Boston; $112 million in assets; 3 percent load; $2,500 minimum; up 22.58 percent.

* Sherman, Dean Fund, San Antonio; $2.7 million in assets; no load; $1,000 minimum; up 22 percent.

* Fidelity Select Financial Portfolio, Boston; $110 million in assets; 3 percent load; $2,500 minimum; up 21.83 percent.

* EquiFund-Wright Hong Kong National Fiduciary Equity Fund, Wright Investors Service, Bridgeport, Conn.; $2.7 million in assets; no load; $1,000 minimum; up 19.95 percent.

* PaineWebber Regional Financial Growth Fund "A," New York; $1.8 million in assets; 4.5 percent load; $1,000 minimum; up 18.88 percent.

* Retirement Planning Funds of America Global Value Fund, Venture Advisors, Santa Fe, N.M.; $19.4 million in assets; 4.75 percent load; $1,000 minimum; up 18.17 percent.

Baltimore Sun Articles
|
|
|
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.