Skip to main content

Funds Notebook: Morningstar Editor Departs; WSJ Kiss to Vanguard; Tech Funds Survived Last Summer

By Alex Berenson and Avi Stieglitz
Staff Reporters

Fund guru John Rekenthaler said Tuesday he was resigning as


publisher and editor to join

The John Nuveen Co.

as vice president and head of the company's investment strategies group. He joined Morningstar in 1988 and has been editor of

Morningstar Investor

since 1993.

"I just wanted to do it," Rekenthaler told

The Street

. "I'm not changing my wife or my kid ¿ There's no deeper darker secret ¿ It's not money. It's not fame either. It's not really power. It's change."

John Nuveen is a Chicago-based investment bank that specializes in underwriting municipal bond offerings. It has recently moved into the open-end fund business and now has three mutual funds.

A replacement for Rekenthaler -- regularly quoted in the mutual fund press -- has not yet been named.



may be virtually synonymous with index funds, but it's not the only game in town.

Scroll to Continue

TheStreet Recommends

You wouldn't know it, though, from Jonathan Clements' piece in

The Wall Street Journal

on Tuesday about why investors should build global index portfolios and not rely on index funds that mimic the

S&P 500


Clements writes in detail about several domestic and international Vanguard index offerings and quotes George Sauter, the portfolio manager of 18 Vanguard index funds, but only makes reference to one other index fund --

Schwab Small-Cap Index fund



While Vanguard is undoubtedly the indexing king with 62% of the money in indexed funds under its management, according to Morningstar, other fund families are making concerted efforts to encroach on its turf.

For example,




recently undercut Vanguard by lowering the expense ratios of their S&P 500 index funds slightly below those of the

Vanguard Index: 500 Portfolio

(VFINX) - Get Vanguard 500 Index Inv Report


And for investors who want the convenience of one-stop-shopping mutual fund supermarkets like no-fee

Schwab OneSource

, Vanguard index funds are not an option.

But with advertising like Clements' piece telling investors how to "index the world" with Vanguard, perhaps they will end up the only game in town after all.


Tech investors who these days can't rid themselves of the grim memory of last summer's tech meltdown should take comfort from the months that followed.

After falling more than 16% from May 30 through July 25, 1996, science and technology funds tracked by

Lipper Analytical Services

have rebounded 31.4% in the subsequent 10 1/2 months through June 12.

The top fund for tech swashbucklers since the bottom has been the tiny $4 million

Ivy Global Science & Technology

, which only started last July, with a 59.5% return. That handily beat the 42.5% return for the S&P 500-imitating Vanguard Index: 500, according to Lipper.

Several of Fidelity's sector funds made up the most ground. The $1.5 billion

Fidelity Select Electronics

(FSELX) - Get Fidelity Select Semiconductors Report

rose 57.1% after having fallen 15%; $437 million

Fidelity Select Technology

(FSPTX) - Get Fidelity Select Technology Report

jumped 45.5% after having dropped 18.6%; and the $531 million

Fidelity Select Computers

(FDCPX) - Get Fidelity Select Tech Hardware Report

added 39.8% after having dipped 15.3%.

The worst-performing tech fund during last summer's downturn -- the $4.8 million

First American: Technology


, which dropped 21.5% -- has continued to trail its peers with a 19.4% return since then.

The author of this item, Avi Stieglitz, owns shares of Fidelity Select Electronics and Fidelity Select Computers.