Fidelity rated top manager of funds Its equities gained 26.4%, outperforming rest of major groups

Consulting firm's survey

None did as well as S&P 500 index's growth of 30.2%

Securities

July 13, 1998|By BLOOMBERG NEWS

BOSTON -- Fidelity Investments ranked as the top-performing U.S. equity fund manager among the 10 biggest fund groups in the past year, continuing a rebound from its disappointing 1996, according to an industry report.

Fidelity's U.S. equity funds rose an average of 26.4 percent in the 12-month period that ended June 30 on an asset-weighted basis, according to Kanon Bloch Carre, a retirement plan consulting business.

Vanguard Group was second, as its funds gained an average 25.8 percent. Still, neither group beat the 30.2 percent advance of the Standard & Poor's 500 Stock Index in the same period.

Franklin Templeton Group's funds placed last in the Kanon Bloch survey, rising an average 17.5 percent, weighed down by the subpar performance of the Franklin Strategic Small Cap and the Franklin Custodial Growth funds.

The Franklin funds managed by Michael Price also have been lagging behind the broader equity market.

"Price's value investing style has underperformed growth stock investing the last six months," said William Dougherty, president of Boston-based Kanon Bloch.

The $10 billion Franklin Mutual Shares, the biggest mutual fund that Price manages, rose 18.6 percent in the 12-month period ended June 30, trailing the 21.5 percent gain recorded by the average U.S. stock fund, according to Kanon Bloch.

"The Mutual Series funds don't chase trends or follow the latest hot stock or industry," said Holly Gibson, a Franklin Templeton spokeswoman.

"These funds don't focus on short-term performance races. A critical part of these funds' value-driven philosophy is to remain focused on investing consistently over the long term."

The best way to analyze the performance of a company's mutual funds is to combine all the assets and then measure the overall returns on an asset-weighted basis, Dougherty said.

Magellan, Contrafund

Fidelity's strong showing was led by the company's biggest funds, including the $71.5 billion Magellan Fund, up 29 percent in the 12-month period ended June 30, and the $33.5 billion Contrafund, up 29.7 percent in the same period.

"The strong performance of these two funds is the main reason for Fidelity's rebound," Dougherty said.

Fidelity placed last in this Kanon Bloch survey in 1996 when the Magellan Fund gained 11.7 percent, badly lagging behind the 23 percent advance of the Standard & Poor's 500 Index.

Funds that mimic the S&P 500 have been among the best-performing funds for more than three years and their high returns are a big reason Vanguard ranked as the No. 2 performing fund group in the latest report, Dougherty said.

Vanguard, the second biggest U.S. fund company, is the leading marketer of S&P 500 funds. Vanguard's $64.3 billion Index-500 Portfolio rose 30.1 percent in the 12-month period ended June 30.

Relative improvement

Putnam Investments showed the greatest improvement in the Kanon Bloch survey relative to competitors. The Boston-based company's U.S. equity funds rose an average 24.7 percent on an asset-weighted basis, ranking fourth among the nation's 10 biggest fund managers, compared with 10th place in the prior year, according to Kanon Bloch.

The improvement in Putnam's performance was led by the Putnam Voyager Fund, the Putnam New Opportunities Fund and the Putnam Vista Fund, each of which gained more than 30 percent, Dougherty said.

Top equity funds

A look at how the U.S. equity funds of the nation's top 10 asset managers performed over the past year on an asset-weighted basis and in the fiscal year ended June 1997:

... ... ... ... ... ... ... .... 6/98 ... 6/97 (rank)

Fidelity Investments .. ... .... 26.4% .. 26.0% (3)

Vanguard Group ... .... ... .... 25.8% .. 29.8% (1)

Morgan Stanley Dean Witter ..... 25.6% .. *

Putnam Investments ... ... ..... 24.7% .. 18.4% (10)

Capital Research & Management .. 24.4% .. 27.4% (2)

Amvescap ... ... ... ... ... ... 22.3% .. 19.9% (9)

T. Rowe Price Associates ... ... 21.9% .. 23.3% (5)

Scudder Kemper Investments ..... 20.8% .. *

Merrill Lynch ... ... ... ... .. 18.8% .. *

Franklin Templeton Group .... .. 17.5% .. 21.4% (8)

* Not included in the top 10 last year by asset size.

Pub Date: 7/13/98

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