Garzarelli to Liquidate Her 6-Month-Old Fund

Elaine Garzarelli is closing down her tiny mutual fund, ending a brief foray into money management for small investors.

The well-known institutional money manager asked her board of directors earlier this week to close the Garzarelli Balanced Fund and liquidate its $2 million in assets, and the board unanimously agreed. The liquidation is effective Dec. 10.

The fund generated a 22.3% return between March 31--its date of inception--and Monday, according to a letter Garzarelli sent to fund shareholders this week. However, the fund didn’t attract many investors--it was mainly Garzarelli herself and friends--and Garzarelli said she lacked the time needed to market its shares.

“I have really spread myself too thin over the past year and a half,” Garzarelli said. She added that her “research work would suffer” if she took the time to “market the fund and do what is necessary in terms of roadshows and presentations.”

Garzarelli said she plans to close other operations to concentrate on money management and research for institutional investors. She once was the stock market strategist for Lehman Bros. Inc. and now runs her own money management company in Chicago under the name Garzarelli Funds.

While working as a Lehman strategist, Garzarelli gained fame by forecasting the October 1987 market crash. Since then, her record has been mixed. For instance, on July 23, 1996, she told clients that U.S. stocks could fall 15% to 20% from peaks reached earlier in the summer. The Dow Jones industrial average closed that day at 5,346.55--and has risen 45% since.

Garzarelli later revised her bearish outlook. She told Bloomberg News last month that she expects the Dow index to remain in a trading range of 7,000 to 8,500. She also said that investors are unlikely to see a repeat of the big bear markets that occurred in the 1960s, 1970s and 1980s.