Funds Notebook: PBHG Fund Returning 800%, Turning Away New Investors
If you want proof that PBHG's aggressive investment style suits this market, just look at (PBNOX) PBHG New Opportunities . It's a small fund, closed to new investors, that's up a staggering 830% over the past year.
How has 27-year-old portfolio manager Frank "Quint" Slattery posted such a fat return, and is there any way you can get a piece of the action? All will be revealed.
The $261 million fund, which closed last fall, had about 90% of its assets in tech stocks like top holdings InfoSpace.com (INSP) and JDS Uniphase (JDSU) at the end of 1999. Year to date, these stocks are up 143% and 74%, respectively.
The fund holds about 40 to 50 stocks and trades quite actively with about 25% of the fund's assets, according to Michael Gaul, a Morningstar analyst who covers the fund. The portfolio's turnover rate -- the percentage of the portfolio that has changed in the past year -- is over 600%, says Gaul. The average domestic stock fund's turnover rate is about 89%.If that type of aggressive approach appeals to you, consider Slattery's other fund, (PBHEX) PBHG Select Equity , which is still open to new investors. But Select, up 363% over the past year, isn't a New Opportunities II. It's a bit more focused, holding 30 stocks. Its goal is to hold the firm's small- and mid-cap favorites, and its turnover is typically much lower than New Opportunities'. Although Slattery only took the reins in November, there's significant overlap between his two funds. At year-end, the funds' top 10 holdings had nine stocks in common, and all but six of Select's top 25 holdings were in New Opportunities' top 25. There's a good chance the style's at its peak -- after all, the shop's average domestic growth fund is up 264% over the past year. Led by high-profile manager Gary Pilgrim, PBHG primarily takes an aggressive approach to risky small- and mid-cap growth stocks, and when those stocks get a cold, these funds can get pneumonia. For example, from the end of 1995 to the end of 1998, the firm's flagship, (PBHGX) PBHG Growth , struggled to stay in the black and trailed more than 80% of its mid-cap growth peers. But with its style back in favor, the firm is clearly on the
Film at 11The folks at the (WWWFX) Internet fund have launched a television ad campaign touting the fund's stellar long-term record, but you should probably take a look at the fund's more recent performance to get the whole story. Over the past three years, the fund has posted a remarkable 140% average annual return, according to Morningstar. Not surprisingly, it's that type of stunning longer-term return that makes good television. After all, it beats 99% of other technology funds. Unfortunately, the fund's tech peers have smoked it since high-profile manager Ryan Jacob left last June. "Looking at those numbers is a bit misleading. A lot of the fund's performance came under Ryan Jacob's management and he's gone," says Chris Traulsen, a Morningstar analyst who covers the fund. The fund is up 146% over the past year and 14.7% since Jan. 1. That sounds good but the fund lags 77% of its tech-fund peers over the past year and almost 90% so far in 2000. Jacob's own dot-com-heavy fund
FYILast year's triple-digit bonanza just keeps going. At the end of 1999, we gushed over the fact that more than 160 funds posted a return of more than 100%. Well, this year could be even more of a blowout. Through last Thursday more than 400 funds are up more than 100% over the past year, according to Lipper. If your AG Edwards broker doesn't usually pitch MFS funds and just did for your IRA or individual retirement account, you might want to probe a little deeper. Through April 28, MFS is offering AG Edwards an extra large commission on sales of its funds in IRA accounts. AG Edwards will get to keep the full, 5.75% sales charge investors pay on Class A shares of equity funds (4.75% on bond funds). Usually, MFS keeps 0.75% of the charge for itself. AG Edwards also will pocket an extra 0.5% on sales of class B shares. It's a little-known, but fairly common promotional technique called
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