has been good for investors who followed Tom Marsico to his new mutual fund company. But it could be better.
You'd have to be fairly deep in the "half-empty" crowd to say this, but there's one nagging catch in the returns posted by his
Growth & Income funds: Both are lagging behind Marsico's old Janus funds over the past year.
Marsico, 44, is one of the fund world's brightest stars. He built a solid reputation managing
Janus Twenty (February 1988-August 1997) and
Janus Growth & Income funds (June 1991-August 1997). Investors who followed him to his new shop might have fared a bit better if they stayed put. But it's hard to complain because his new and old funds are all beating the
"I don't think anyone in these Marsico funds should be second-guessing themselves," says Jim Folwell, a consultant with Boston-based fund-researcher
Marsico left Janus to form Marsico Capital in October 1997. He sold a 50% stake in his firm to
Bank of America
in November 1998. Bank of America-owned
now sells clone versions of his no-load funds. He also sub-advises
ASAF Marsico Capital Growth fund and manages part of
Style Select Focus Growth & Income fund.
Marsico has built a staff of eight portfolio managers and analysts working with him on three strategies: a Janus Twenty-like focused approach (Marsico Focus and
Nations Marsico Focus), a Janus Growth & Income-like style (Marsico Growth & Income and
NationsBanc Marsico Growth & Income), and a diversified growth style for American Skandia that doesn't worry about quarterly income payouts.
Investors have piled in, and Marsico now manages $11 billion in mutual funds and private accounts. His own no-load funds have taken in more than $1 billion this year through Sept. 30, according to
Financial Research Corp
But Marsico's focus on large-cap, liquid stocks should keep his funds from buckling under the weight of investors' dollars. "One of the beauties of the fund industry is that you need to achieve scale to be successful.
Marsico's strategy can do that without too many problems," says Cerrulli's Folwell.
Back-office duties (customer service, fund accounting, etc.) are farmed out to Milwaukee-based
Sunstone Financial Group
, and Boston-based
, allowing Denver-based Marsico to focus strictly on money management.
If a rising tide of dollars keeps rolling in the door, shareholders should keep an eye on the funds' annual expenses. They range from 1.32% to 1.75%, according to
. Expenses on Janus Twenty and Janus Growth & Income are below 1%.
Post-Venture Funds to Merge
Though financial advisers say they and their clients are hungry for venture capital investments, apparently post-venture funds don't whet their appetite.
plans to merge its
Post-Venture Capital fund into its Global Post-Venture fund.
This is one of those cases where the whale is being swallowed by the guppy with a better record. According to
, the two funds have $68.8 million in combined assets, but the surviving fund, Global Post-Venture, accounts for just $7.4 million of that total.
As we recently
reported, it's difficult for investors with less than $1 million in assets to participate in venture capital funds that invest in private companies. The best they can do -- through mutual funds, anyway -- are post-venture funds that can invest only up to 15% of their assets in private companies. Otherwise, these funds focus on companies that have received venture capital in the past.
According to Warburg-Pincus' filing, the merging funds follow a similar strategy and share management team leader Elizabeth Dater. Shareholders should keep in mind, however, that the surviving global fund can invest all of its assets abroad and can invest in emerging markets. The domestic fund can only invest 20% of its assets overseas and is not allowed to invest in emerging markets.
Though Warburg-Pincus says the merger is intended, at least in part, to eliminate redundancies in its product line, the funds' portfolios have little overlap. As of June 30, the global fund had 66% of its assets in foreign stocks, according to
. And the domestic fund had just 7.6% of its assets in foreign stocks, as of Sept. 30. The two funds have identical expense ratios.
If shareholders approve, the funds will merge Jan. 28, 2000.
Another Small-Cap Fund Closes Doors
Maybe when you close one door you really do open another. Last week
American Century Funds
New Opportunities fund to new investors. This week, it plans to offer a new aggressive fund.
American Century promised investors it would close New Opportunities at $400 million, but a rush of last-minute cash pushed asset levels to $563.8 million last Monday. Assets have grown from strong performance as well -- the fund is up 94.6% through Nov. 26, according to
. The closing comes on the heels of small-cap fund closings in November by
American Century plans to open a new aggressive fund Tuesday, the
fund. Veedot is a calculus symbol relating to acceleration, and the new fund will focus on companies of all sizes that have accelerating earnings, says Beth Randolph, a spokeswoman at the Kansas City, Mo., fund concern.
Today's Managers Miss the Cut
Looks like institutional money managers don't think too highly of today's mutual fund managers.
Asked to rank the century's top-10 money managers, 301 institutional investors picked only one who is currently running a mutual fund: Mark Mobius, who runs
Templeton Developing Markets.
It doesn't get much more flattering outside the top 10 either. Mario Gabelli, manager of
Gabelli Asset and
Gabelli Value, among others, and
Janus fund's James Craig are the only current mutual fund managers who came close to cracking the top 10, according to Rick Anderson, a managing director with the
, the New York-based investment consultancy that ran the survey.
Several former fund managers, including Roy Neuberger of
and George Putnam of
, just missed the cut as well.
The current fund managers' snub could be explained by the fact that some obvious choices weren't included on the ballot. Anderson says the three leading write-ins are all currently running mutual funds:
bond specialist William Gross, Tom Marsico and
Legg Mason Value's Bill Miller.