Nation's 10 biggest funds lost $9.3 billion in July

Mutual Funds

August 18, 1996|By BLOOMBERG BUSINESS NEWS

BOSTON -- How bad was the U.S. stock market in July? Well, here's one way to measure it. The nation's 10 biggest mutual funds lost a combined $9.3 billion in assets.

More money evaporated from these funds alone than the gross domestic products of such countries as Ghana, $6.6 billion; Costa Rica, $6.4 billion; Honduras, $5.5 billion; and Angola, $5.1 billion, according to the World Almanac.

"July was the worst month for aggressive equity fund investors since the market crash of 1987," said Bill Daugherty, president of Kanon Bloch Carre, a retirement plan consulting firm in Boston. "No equity investors made money last month."

The bulk of the asset loss for the big funds was tied to the falling market and a smaller percentage can be attributed to shareholder redemptions, Daugherty said. The benchmark Standard & Poor's 500 index was down 4.6 percent in July and the Nasdaq composite index was down 8.8 percent.

Fidelity Investment's Magellan Fund recorded the biggest loss of assets and the highest level of redemptions by shareholders withdrawing their money. None of the other large funds reported substantial net outflows.

Fidelity Investments' Magellan Fund was down 4.65 percent on a total-return basis and its assets fell $3.5 billion, or 6.4 percent, in July, the largest one-month decline in dollar terms in history for a mutual fund, according to Lipper Analytical Services Inc.

The fund recording the worst return in July was Twentieth Century Cos.' flagship Ultra Investors Fund, which fell 8.88 percent on a total-return basis, according to Lipper. Ultra fund's assets declined 8.6 percent to $15.9 billion on July 31, the company said.

The difference between Ultra and Magellan is that Fidelity saw investors redeem almost $1 billion from Magellan while net withdrawals were negligible for Twentieth Century's Ultra fund.

The other fund to lose $1 billion last month was Capital Research and Management Co.'s Investment Company of America, as assets fell to $27.1 billion from $28.1 billion, the company said.

To be sure, its $1 billion decline represents just 3.6 percent of overall assets, said Amy Arnott, a senior analyst at Chicago's Morningstar Inc. "The $1 billion loss isn't as bad as it sounds," she said.

An estimated $3.5 billion of new money was invested in equity funds last month, the lowest net inflows since November 1994. and down 75 percent from $14.48 billion in June, the Investment Company Institute. The industry trade group will report its official inflow results later this month.

Losses at 10 biggest funds

Assets for the 10 biggest funds as of June 30 and July 31 and how the funds performed in July.

Fund ....................... Assets (bil) ....... Assets (bil) ....... July's

............................ July 31 ............ June 30 ............ return

NFidelity Magellan .......... $51.0 .............. $54.5 .............. -4.65%

NInvestment Co. of Am. ...... $27.1 .............. $28.1 .............. -3.55%

Vanguard 500 Portfolio ..... $23.2 .............. $23.6 .............. -4.42%

Washington Mutual .......... $20.9 .............. $21.6 .............. -3.79%

NFidelity Growth & Income ... $19.2 .............. $19.6 .............. -3.82%

Fidelity Contrafund ........ $18.9 .............. $19.6 .............. -4.68%

NTwentieth Century Ultra .... $15.9 .............. $17.4 .............. -8.88%

Fidelity Puritan ........... $16.7 .............. $17.1 .............. -1.92%

LIncome Fund of America . ..$14.4 .............. $14.8 .............. -1.97%

Vanguard Windsor ........... $14.4 .............. $14.7 .............. -1.10%

Pub Date: 8/18/96

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