KANSAS CITY, Mo. -- In the city where everything's up to date, Twentieth Century Mutual Funds is about to go the way of the buggy whip -- in name, at least. Approaching the new millennium, the company needs a new identity, a marketing nightmare in an industry in which reputation and name recognition are among the biggest assets.
But the nameplate on its front door might be the least of the changes in store for Twentieth Century in the next five years.
An upstart among mutual fund behemoths, the company now aims to move into the top tier of asset managers. As it prepares for battle with Fidelity Investments and Vanguard, Twentieth Century is still adjusting to a generational change of leadership, and it remains to be seen whether the scion of James E. Stowers, the company's 71-year-old founder and chairman, has the vision to lead the company into the next century.
Long famed for its stock-picking prowess, Twentieth Century is adding bond funds and looking for institutional business, like corporate retirement plans. In its first big move in that direction, the company agreed in February to buy Benham Management International, a California company that specializes in fixed-income funds.
Twentieth Century also is planning a host of new services: providing financial advice, hooking up with an on-line service that allows customers to perform financial transactions by computer, and processing everything from fund statements to credit card bills.
Along the way, the company hopes to more than double the amount of assets it manages over the next five years, to $80 billion, while maintaining its funds' above-average performance.
Charged with that task is James E. Stowers III, president since 1993 and the 36-year-old son of the company's founder. As he sees it, Twentieth Century has plenty of room to grow. "If we felt we were a fully mature company," he said, "we'd probably be selling ourselves short."
For investors, Twentieth Century's new thrust raises several other pertinent questions. Mr. Stowers III is part of the four-person manager team that oversees four of the company's most popular stock funds: Ultra, Vista, Growth and Giftrust. Much of his time in coming months, though, is sure to be focused more on devising new products than on making money for investors.
And when two fund companies merge, they inevitably experience difficulties when combining operating systems -- which means those quarterly statements merit a careful look in coming months.
More broadly, the younger Stowers has proved himself as a portfolio manager but not yet as a corporate leader. His father has excelled in both roles.
Mr. Stowers III doesn't have his father's magnetic personality, and whether he can command the same respect, particularly from Benham's bond experts -- who have their own investment guru in James M. Benham -- remains uncertain.
Indicative of the differences between father and son is how Mr. Stowers III is handling the name change. The elder Stowers came up with the current name off the top of his head, but his son has hired a consultant. The adviser received just one directive: Forget 21st Century, which has already been claimed by a host of forward-looking companies.
Whatever name gets the nod, officials of Twentieth Century regard the change not as a nightmare but as a chance few companies get: to forge a new identity.
"For years, Twentieth Century has been known as a one-trick pony," said Robert C. Puff Jr., chief investment officer, who oversees all the company's funds and asset managers. The company built its reputation buying the stocks of small, fast-growing companies, using a computer to screen the quarterly statements of thousands of companies and to pluck out those whose sales and earnings are accelerating the fastest.
That method has served the Twentieth Century funds well since 1971, when the elder Stowers took over active management of the portfolios. Before that, he had farmed out the management.
Frustrated by the hired hands' failure to produce top returns, he devoted himself to building one of Twentieth Century's most valuable assets: an array of financial data on more than 15,000 companies.
While the company statements spit out by the computer are used only as a starting point by the fund managers, the value of the screening method is hard to overstate. The two biggest funds, Ultra and Growth, handily beat the Standard & Poor's 500 over the most recent 5-year and 10-year spans.
Although the fund company long invested only in United States stocks, it has branched out recently. In 1991, Twentieth Century offered its first international fund, following up last year with another international fund specializing in stocks of smaller companies.
Similarly, Twentieth Century has reached beyond the growth style of investing, adding two conservative funds: the Value fund, which looks for beaten-down stocks, in 1993 and the Equity Income portfolio, which finds dividend-paying stocks, last year.
The actions proved prescient. Last year United States investors turned from their long affection for small, fast-growing companies to large, brand-name corporations.
As a result, the Value and Equity Income funds have become Twentieth Century's two best performers, gaining 16 percent and 15 percent, respectively, since the beginning of the year -- well above the 13 percent and 12 percent average gains for their fund categories.
The downside, of course, is that most of Twentieth Century's equity funds have underperformed the broad market this year.
