Fund Managers Who Should Fade Away
During the delirious days of the late '90s stock market, a tech mutual fund manager could get almost as much press as a gyrating, bare-bellied teen-age singer.
These guys were everywhere. And everyone was talking to them and writing about them -- myself included.
But now some investors want these managers to just disappear along with all the money they lost for their shareholders. These stock pickers need to take cover and resurface only after they've learned how to pick decent stocks.
Alberto VilarAlberto Vilar, who runs a number of funds, one of which is (ATAHX) Amerindo Technology , is a philanthropist as well as a money manager. He's a well-known donor to opera companies, such as the Metropolitan Opera in New York City. Given how much his funds have fallen in the past few years, Vilar should think about donating some of this money to his shareholders. Reader Sal Pramas wrote in to say: "I'm glad someone is finally identifying the Van Wagoners of the world as the wealth destroyers that they are. But it's even worse than you suggest because most of the assets come into these funds at their peak performance. Please add Amerindo funds to that list." Indeed, Vilar's Amerindo Technology fund has been truly awful. If you look at the fund's three-year return at the end of April, Amerindo Technology is one of the worst stock funds tracked by Morningstar. This Amerindo fund has lost an average of 37% a year over the past three years. Only two other equity funds have turned in worse records. Yes, this is a technology fund. And tech stocks have been blatantly bad. But this fund has been exceptionally awful. It's the worst-performing tech fund over the past three years. It's expensive. And it's still dangerously concentrated in its top holdings. Almost two-thirds of the fund's assets were in its 10 largest holdings at the end of March. Vilar and co-manager Gary Tanaka fail to offer any sort of downside protection in this fund. (Amerindo also deserves being singled out for launching that ridiculous (BTBAX) Internet B2B fund near the peak of the tech market, and then keeping the fund open.) The only other thing investors need to know about this fund: Stay away.
Kevin LandisReader James Merrill thinks Kevin Landis, another tech manager, should also fade away. "Hopefully you have an even greater celebrity fund category for him," he writes. Landis' (BTBAX) Firsthand Technology Value fund hasn't lost as much money as the Amerindo Technology fund over the past few years. But that's no consolation to investors who lost piles of cash as this fund imploded. Once again, this isn't just a tech fund. It's a risky tech fund. Firsthand Technology Value is aggressive and tends to invest in smaller, lesser-known tech stocks. It has fallen an average of 16% over the past three years and has continued to crumble this year. In 2002, the fund is down another 38.8%. This isn't the only fund that Firsthand runs. In fact, this small fund company offers six tech-oriented funds. In hindsight, Firsthand should have concentrated on manning its flagship Tech Value fund before the company decided to corner the market on tech funds. If you have to own a technology fund, there are definitely better ones to buy. Fidelity is always a good place to start. Several of the firm's Select sector funds invest in various areas of technology. Its (FSELX) Select Electronics fund, which focuses on semiconductor stocks, has been around since the mid-1980s. Its expense ratio is one of the lowest in this category. And the fund is backed by Fidelity's vast research team. Yes, this tech fund has lost money. But it has held up much better than the funds run by Vilar and Landis.
Louis NavellierTech managers aren't the only stock pickers who investors have learned to loathe. Reader John Walsh has some choice words for Louis Navellier. "I have a managed account with him and he lost 70% of my money and, worse yet, he is an expert," he writes. "His picks ... are usually the ones that are already up 200%. Warn the public to head for the hills." Now, some of Navellier's funds haven't done so badly. The (NPLGX) Navellier Large Cap Growth fund does have a three-year annualized return of negative 1%. But that performance is better than 94% of other large-cap growth funds. But his (NASCX) Aggressive Small Cap Equity fund is another story. It has dropped 28% in the past year and has one of the worst three-year records of any small-cap growth fund. And a manager who produces great returns on one fund and bad ones on another has to make you ask: Should you invest with that stock picker at all?
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