WITH HIS Gateway 2000 computer perched on his desk, Robert F. Mewshaw is a one-man investing machine.
The 44-year-old co-founder of Van Sant and Mewshaw Inc. can invest millions of dollars in seconds, and conduct research to sniff out the hottest stocks or mutual funds.
"It's incredible," said Mewshaw, who is a registered investment counselor. "Six years ago we couldn't have done this because the technology wasn't there."
From their Lutherville office, Mewshaw and his partner, Paul K. Van Sant Jr., specialize in developing investment game plans for clients and then manage the money by putting it into no-load mutual funds for a flat fee.
It's the kind of money management that is conducted in small, suburban offices rather than in downtown office towers. And the business is mushrooming.
Charles Schwab & Co., for example, calculates that about 30 percent of its $181.7 billion in customer assets is managed by investment advisers.
Van Sant and Mewshaw have never been busier. Their business has been expanding at an annual 25 percent clip since they opened the firm in 1992. Assets they manage have shot up to $100 million, and their clients, who are all private families or individuals, now number about 700. The largest account is $4 million.
Van Sant and Mewshaw might still be grumbling about their former jobs as stockbrokers if it hadn't been for a confluence of events: The soaring popularity of mutual funds, and huge advances in technology, which enabled them to strike out on their own.
Mutual funds have attracted millions of investors who find them easy to understand and less intimidating than trying to pick stocks or deal with brokers. And computers have allowed firms like Van Sant and Mewshaw to link up with the trading desks of discount brokerage firms, and to tap into companies, like Morningstar, that research the performance of mutual funds.
Because of these changes, even average people can afford to have professionals advise them on their money matters. To get in the door of many established money managers, an investor may finds he needs a cool $1 million for starters. But $100,000 will open an account with Van Sant and Mewshaw.
Van Sant and Mewshaw's customers are typically 60 years old and they don't have the time or inclination to manage their own money. Some of them have received lump-sum retirement payments, and they are looking to be counseled on estate planning, while some younger clients are investing for their children's college education.
"Most of our clients aren't gunslingers," said Van Sant, who is 47. "If they were, they would be surfing the Net" for stocks.
Van Sant said he spends more than two hours with each customer during an initial meeting to assess investment goals and tolerance for risk, and to gauge the customer's knowledge about the stock market. Part of his job is to educate customers to their way of investing, which is long term, or anywhere from three years and up.
Van Sant said many customers come to the firm and invest "backwards."
"People want to buy what's done well," he said. "They see a hot Internet stock come along like Yahoo!, and they feel like everybody is making money but them."
In 1993, when drug stocks were getting pounded, Van Sant and Mewshaw started buying mutual funds specializing in health care stocks, like the Vanguard Specialty Health Care Fund, as the shares sank.
But some clients couldn't stomach the strategy. They called Van Sant on the telephone saying: "'Don't you watch the news? Don't you know what is going on?' " he said.
Van Sant and Mewshaw correctly bet that health care stocks would rebound. Investors in the the Vanguard fund made 104 percent on their money between August 1993 and March 1996.
Part of the job includes keeping customers from making dumb investments.
"What they pay us to do is to play devil's advocate," Van Sant said. "They want us to talk them out of things."
For the advice and management expertise, a customer pays a flat annual fee of 1 percent to 1.5 percent of his total portfolio.
The firm makes its investments through Charles Schwab, which tracks each account and sends monthly statements to Van Sant and Mewshaw's customers. Van Sant and Mewshaw send each customer a quarterly statement that details that portfolio's performance.
About 90 percent of the assets that Van Sant and Mewshaw manage is invested in no-load mutual funds. Van Sant and Mewshaw like the strategy because it is less risky than betting the farm on individual stocks.
They use newsletters, magazines, newspapers and wire services to find mutual funds that are low risk, but strong performers.
Their favorite mutual fund managers include Michael Price, who manages the Mutual Series Funds; Ralph Wagner, manager of the Acorn Funds; and Jean-Marie Eveillard, manager of the SoGen Funds.
These managers, they say, have been in the business for years, and make their own investment decisions.
"They can do anything they want," Mewshaw said. "If they think they should be in gold, they invest in gold. They are not constrained."
The rub against mutual funds is that their holders sacrifice the chance for the big hit. But they are far less risky, Van Sant and Mewshaw note.
"We are not even interested in beating the market," Mewshaw said. "That is not what our clients are concerned about. What they are concerned about is that they have a comfortable position. They sleep at night."
Pub Date: 5/06/96
