Which Price fund is best? 3 answers Three magazines give 3 different responses

Mutual funds

February 02, 1997|By Bill Atkinson | Bill Atkinson,SUN STAFF

T. Rowe Price Associates Inc. has a bevy of mutual funds, but which one is the best?

Smart Money magazine says it's T. Rowe Price's Growth Stock. Money magazine claims its Price's Equity Income Fund; and Kiplinger's Mutual Fund '97 picks Mid-Cap Growth Fund and the Equity Income Fund.

No wonder investors are confused.

With more than 8,000 mutual funds available to consumers, financial publications are trying to help investors sort out the best, but sometimes that only adds to the confusion.

"Because one magazine recommends one fund doesn't means it is the best one for you to invest in," said Steven Norwitz, a spokesman for Baltimore-based T. Rowe Price, which offers 70 mutual funds. "Investors still should do their homework. This shows that there are just a lot of good funds out there."

What's clear is that Price was the only company to have funds mentioned in all three magazines.

"It reflects the virtues of having consistent performance as opposed to being in the top 10 one year, but then falling behind in other years," Norwitz said.

Each magazine had its own method to determine which funds were best.

Smart Money hired an outside expert who found funds that were unlikely to suffer big, short-term losses, and at the same time post strong, consistent returns after inflation.

Kiplinger culled thousands of funds to find the ones that were high performers over the long haul, charged no upfront fees, had a low minimum initial investment and had experienced managers.

Money hired Morningstar Inc., the Chicago-based mutual fund rating firm, to find consistent performing funds with low volatility, low annual expenses and experienced managers.

"The real message is that Equity Income is the only place to invest," said Brian C. Rogers, who manages the $8.3 billion fund, and is on this month's cover of Money.

Money magazine said that Equity Income is the kind of mutual fund that won't keep investors up at night because it "achieves near-market returns with low risk."

The magazine also picked Equity Income because in declining markets it's made gains, not crumbled like other funds.

The fund returned 20.4 percent last year, beating the average 18.9 percent return by competitors. Its average annualized total return over five years was 17.1 percent, compared with 13.6 percent for its peer group.

Kiplinger agreed with Money that Equity Income is a top-notch fund, but it also liked Price's Mid-Cap Growth Fund.

"This fund won't celebrate its fifth birthday until June, but shareholders aren't waiting to party," the magazine said.

Mid-Cap returned 24.8 percent last year compared with 17.9 percent for its peer group. And since it opened June 30, 1992, it has returned 25.4 percent, compared with the competition's 17.4 percent.

Smart Money came to a different conclusion. In its article, the publication picked Price's Growth Stock Fund, managed by John D. Gillespie, who was trained as an analyst.

Smart Money liked Gillespie's hard-nosed approach to picking companies for Growth Stock's portfolio. Before investing in a company, Gillespie pours through five years of its financial data and then estimates its future performance using computer models.

"I try and look at a business and see how it operates through at least one cycle," he said in an interview.

Growth Stock, with $3.5 billion under management, has consistently beaten funds that it competes against. It returned 21.7 percent in 1996, beating the industry average's 19.2 percent. Its average annualized total return over the last five years was 14.5 percent, compared with 13 percent for its peer group.

L Rogers isn't wowed by the media play Price has been getting.

"I dismiss a lot of this stuff because there is no right answer," he said. "It is like a presidential debate; there are two sides to everything."

Pub Date: 2/02/97

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