Pick a Theme, It’s Probably Out There
You have to give money management firms some credit. They continue to introduce mutual funds with unusual and even unique wrinkles. That’s no easy task considering that the field of funds is saturated--there are more than 6,000 distinct portfolios out there.
Sexual orientation, sports and technology are among the themes used by some of this year’s unusual new funds. Here’s a look at a few head-turning concepts that have debuted in 1996 or are scheduled to do so soon.
* The Meyers Sheppard Pride Fund. This portfolio invests in companies that follow progressive policies toward gays and lesbians.
“At a minimum, this means a corporation must have included sexual orientation in its written antidiscrimination policies,” says portfolio manager Shelly Meyers in Beverly Hills.
Preferably, she adds, a company will also have extended workplace benefits to gay couples, as about 50 American companies have.
Add to this the fund’s focus on finding bargain stocks and you have its investment orientation.
“We’re value managers looking for stocks selling at prices below their inherent values,” says Meyers, a former analyst and assistant portfolio manager at Boston Co. Five large holdings include IBM Corp., Amgen Inc., Kimberly-Clark Corp., McKesson Corp. and Mobil Corp.
With only $600,000 in assets, the fund is too small to be listed in newspaper tables, although investors can call (800) 410-3337 for daily prices and information. It debuted at $10 a share on June 13 and sold for $9.58 as of Aug. 29. But most shareholders bought following the market slump of early July and are showing small profit, Meyers says.
The fund does not carry a sales charge, but ongoing expenses are likely to run a stiff 2.25% annually until assets move well into the multimillion-dollar range. The regular-account minimum investment of $1,000 is reduced for anyone setting up a retirement account or systematic-investment plan.
* The Sportsfund. The fitness craze and the popularity of spectator sports are helping to drive this portfolio, which was born Aug. 1 at $10 a share. As of Aug. 29, the fund had risen to $10.25 a share, after subtracting its 4% sales charge.
“We’re trying to diversify the portfolio across different sports and across different industries,” says co-manager Mark Kaplan, former director of research at H.M. Payson & Co., a money management firm in Portland, Maine.
Even so, the portfolio is less diversified than the typical fund and probably should be viewed as riskier. Some of its larger holdings include Reebok International Ltd., Russell Corp. and Oakley Inc.
The fund must invest roughly two-thirds of its assets in companies that derive at least half their assets, revenue or profits from sports-related businesses. This mostly means clothing and equipment manufacturers, with perhaps a few sports-medicine and related firms sprinkled in. But publicly traded teams such as Boston Celtics LP are few in number and probably won’t account for a significant presence, Kaplan says.
With only about $250,000 in assets, the Sportsfund is also too small to be listed in newspaper mutual fund tables. But investors can call (888) 82-SPORT, toll-free, for daily prices and literature. Expenses will probably run 2% a year until the portfolio reaches the multimillion-dollar range.
* The Principal Preservation Pacific Stock Exchange Technology 100 Index Portfolio might have a longer name than any other mutual fund, but that’s not what makes it unusual. Rather, the product appears to be the first attempt at playing technology from an indexing approach.
Why indexing? Lower costs made possible by a strict buy-and-hold strategy are one plus, says manager Jay Ferrara. Investors pay about 0.8% in yearly expenses, compared with 1.8% in average costs for other tech funds tracked by Morningstar Inc. of Chicago.
Another benefit is the index’s blue-chip pedigree. “We avoid high-flyers trading at 700 times earnings,” Ferrara says. “With this index, we invest only in the top tech firms.”
The portfolio buys the same 100 stocks included in the 14-year-old PSE Technology Index, with no company weighing in above 4% of fund assets. The largest holdings are Microsoft Corp., IBM and Intel Corp. The fund has about $3 million in assets.
Principal Preservation ([888] 832-3863) has been in the fund business since 1985 and has $370 million in seven other portfolios. One factor offsetting the low ongoing expenses is a front-end sales charge of as much as 4.5%.
The fund, introduced June 10 at $10 a share, sold for $9.39 on Aug. 29, after subtracting the load.
* Internet funds. At least three money management firms either plan to unveil or have already introduced portfolios that focus on Internet-related companies--firms ranging from America Online Inc. to manufacturers of computer equipment.
Of these, perhaps the most promising is the Munder Net Net Fund, if only because Munder Capital Management ([800] 239-3334) in Birmingham, Mich., is a decent-size firm that already counts $30 billion in assets and 18 mutual funds.
The Net Net portfolio debuted Aug. 19. It requires a $1,000 minimum. Annual expenses are likely to run 1.5%. There’s no sales charge.
A potential problem with Internet funds is that they focus on just one corner of the technology arena, and a speculative one at that.
