Home Finance Portfolio, Victor Thay since 1999, up .014%
Thay's stock picking has been buoyed by a business cycle that has favored his core groupings, names like
. But he strayed earlier in the year into
. Guess he got the dot-com bug. He doesn't have it now, and I like how he is set up for a
Fed easing. You want just this fund if you think that the Fed is going to ease several times in the next few quarters.
Insurance Portfolio: Timothy Cohen, since 1999, up 18%
Talk about the place to be! Consolidation. Better pricing. A cycle that might be in your favor. Plus a low interest-rate environment. You have to like this fund. Now, here is how I like to use a sector fund. I don't have the expertise to analyze the insurance market. But Cohen sure does. This industry is going from bad to good. You don't want to be in the stinker. You can play it with this sector fund. I think this insurance business is in a multiyear up cycle. So the bet can still be made.
Broad: Above par (but really smoking in the last few months.)
Biotechnology Portfolio: Yolanda McGettigan: since February 2000. up 87%
McGettigan got hit like everyone else in the past six months, but again, I think that this is an ideal sector-fund play. You want to own biotech. You believe in the industry. You are afraid to pick the wrong one or one that flunks some
Food and Drug Administration
test. You don't want yours to go to zero. This is the way to play. The fact that McGettigan lost 9% in the past six months is a godsend vs. what could have happened had you bought the wrong ones. If she hadn't lost any money, she would have been in the wrong stocks for the rebound.
Her performance in the past six months is gauged against a health care index that was very strong, so she looks like she underperformed, but that's a false compare. She did quite well.
Health Care Portfolio: Yolanda McGettigan, since June 1, 2000. up 18%
Full disclosure, I am in this fund because 18 years ago when I set up my IRA, I decided that I couldn't pick the best drug and biotech stocks so I ought to let someone else do it. I still think that is good reasoning.
McGettigan picks a broad array of biotech and pharma companies. She is cautious on the group because of politics: "Any
victory could be seen as a negative influence on the sector, potentially reigniting initiatives to reform
and the health care industry." As someone who now picks stocks in this group for a living, I like the offerings this fund has chosen. It has that biotech kicker that I like so much for the long term. A great investment.
Broad: Above par
Sector: Below par because of biotech exposure.
Medical Delivery Portfolio: Pratima Abichandani, since February 2000, up 16%
likes to dissect groups into tiny slices. This fund reads like a cost-containment fund for health care. It is all of the private folks designed to make the health care system more like a business. I am thinking that if you think
George W. Bush
is going to be elected president, this has to be the ultimate sector fund for you because he wants to give the HMOs and the containment companies the chance to make the system more rational. (Even if it might be at the expense of choice.) This fund is a proxy for reining costs in.
are big positions.
Narrow: Below par (compared with a health care index with lots of pharma).
Medical Equipment and Systems Portfolio: Kerry Nelson and now Christine Schaulat, since September 2000, up 40%.
Hot area when the economy is cooling. This fund concentrates on the
, which has been one of the great areas to be in. While not as cost-containment oriented as the other Medical fund, it does own some nifty performers in a slowdown. That said, this is just like the Medical Delivery fund without the HMOs. Seems like a bit of needless duplication to me but the performance without those HMOs, which has been a drag but are now pretty good, has been fantastic.
Broad: Above par
Sector: Substantially above par
Energy Portfolio, Scott Offen, since 1999, up 17%
Again, classic use of a sector fund. You don't know which oil company is worth owning, but you think oil is going to $40, and you don't want to be in the one that has hedged out the up side or has other problems that will make it unable to participate. This fund has a good mixture of drillers, natural gas plays and integrateds. Similarly, if you thought oil was done going up, I can't imagine a worse fund for you.
Broad: Slightly above par
Sector: Well above par
Energy Services: Nick Tiller, since February 2000. up 53%
Again, perfect use of the sector concept, for those who want to be levered to a huge increase in oil prices. This fund invests in the drillers, those whose rates go up as oil goes up and more drilling occurs. Your worst fear if you wanted to play an individual driller is that it doesn't have the right equipment or is only exposed to deep water, and shallow water is what is moving. This fund solves that problem. This guy really caught the cycle. He hit the lights out.
Gold Portfolio: Niel Marotta, down 6%, since April 2000.
I hate the gold stocks. I have ever since
Greenspan came in and it has been a terrific bet to hate gold. But maybe you think the world is going to come to an end. In the 80s, a lot of my wealthy clients insisted on a portion of their assets in gold. I always thought they were nuts, but, heck, you have to do what the clients want.
Your worst nightmare if you like gold is that you own the wrong gold stock, the one that has hedged out the up side or is sitting on dirt and not gold. Or Bre-X the legendary gold fraud. That's why this sector fund is great for you. I wouldn't fret much that it fell below its benchmark, which is a natural resources benchmark. That standard is not a gold fund; it has lots of other goodies in it.
Broad: Below par
Sector: Below par
Natural Resources: Scott Offen, since 1999, up 19%
This fund is heavily overweighted in energy, specifically natural gas and oil service. This is not a play on minerals. That's fine, but if I want that, why not be in the energy funds? This is another confusing distinction that I think could be ended by closing this fund and merging it with the petrol funds. This choice worked this year, because oil and oil service were hot, but anyone who wanted to buy a mineral or coal or metals play will have missed the mark.
Broad: Above par
Sector: Well above par
Business Services and Outsourcing Portfolio: Simon Wolf, since 2000, up 5%
This fund should have done better. This is one red-hot area and has been for sometime, so I was surprised to see the underperformance. I think it stays too close to just owning the biggest consulting and outsourcing funds, not the technology outsourcing funds, which have been so hot. I think you would have been very disappointed to have received this return, which was way overweighted in
has a whole bunch of tech-sector funds, and they are all benchmarked against a tech index that simply isn't fair or representative of outsourcing and business services, so the performance looks even worse than it is.
Sector: Well below par
Computers Portfolio: Larry Rakers, since 2000, up 70%
Hot, hot, hot. This fund owns the hottest big-cap tech there is, and Rakers has totally delivered. If you think that big-cap tech is going to keep having the years that it has had in the past decade, this fund may be the only one you need. Well done.
Sector: Very good
Developing Communications: Rajiv Kaul, since February 2000, up 99%
Oh my, a fund that is looking for the next
while owning Cisco. The fund that has the
. The fund that has the hottest hand in the book.
And, possibly, just maybe, the worst fund in the world, if the nightmare on telcos street comes true. This fund is the most levered to the capital-expenditure budget of
and every other provider that you could find. If you think, though, that all the worries are nonsense, belly up to the bar and give Kaul the money. He will play it much better than you ever can.
Sector: Still extraordinary
Electronics Portfolio: Brian Hanson, since February 2000, up 102%
They call him Mr. Chips. Actually, if they don't they sure should. Ever wonder whether you should be in DRAMs or PLDs or microprocessors or in semi equipment or in outsourcing? Stop wondering and give your money to Hanson because he has it down. This is the perfect pastiche of high tech that has been so hot for so long. I purchased shares in this fund when it was started and have stuck with it for 15 years. One of the best ways to play the group.
Sector: Still extraordinary
Software and Computer Services Portfolio: Telis Bertsekas, since March 2000, up 82%
You want Net infrastructure and B2B? Do you want to be in the customer relationship software game? How about being levered to
and the companies that are building out the giant databases on the Web? Storage, too? Bertsekas has the right ammo. This fund may have the highest price-to-earnings ratios of the whole tech group but it has some extraordinary stocks in it for a ramp into the end of the year, if you think we get one.
Narrrow: Still terrific.
Technology Portfolio: Larry Rakers, since February 2000, up 92%
Knockout performance for an $8 billion fund. Frankly, I like this fund, which is a combination of semis and software and business to business and communications, better than all of the others because the manager can choose among the hot tech areas if he wants to.
You don't want him to be constrained to outsourcing or software or chips (although the other funds certainly wouldn't avoid those areas, this fund has its mandate to look at all.) It is overweighted right now in the telco equipment biz, as that had been the hot group until recently. Its overexposure to that part of the tech sector is what is keeping me from switching to it now from Select Electronics.
Sector: Still extraordinary
Natural Gas Portfolio: Christian Zann, since 1999, up 37%
Lovers of clean energy might have something going with this fund, which has drillers and natural gas companies aplenty. This is the perfect fund for you if you think that long-term natural gas prices must go higher. Otherwise, I don't think you need to bother with it.
Broad: Very good
Sector: Excellent (against a utilities index)
Telecommunications Portfolio: Peter Saperstone, since 1998, up 30%
Oh boy, this fund has been slaughtered of late. It looks like all of those CLECs and telco providers that are hurting. If you think the bloodletting is about to end in the group , I still don't know if I would buy this one because it has some real bad apples in it. This fund could bounce when year-end tax loss selling abates, but you shouldn't trade funds. I would stay away. This was a great fund last year as the numbers show. Now I wouldn't bother.
Broad: Excellent for a year, awful recently,
Narrow: Really excellent against utilities average that is presented but very misleading.
Utilities Growth Portfolio: John Roth, since 1999, up 17%
Who would have thought this could be such a kooky fund, with alternative power and phone company plays galore. I think this is one of the most dangerous funds out there now and I would not be misled by its name. This is a high, high-octane fund that, like the telecommunications fund, did extremely well last year but could really hurt you know. Very, very high risk.
Sector: Well above par (but against utilities index, not against the kind of stuff in this fund.)
James J. Cramer is manager of a hedge fund and co-founder of TheStreet.com. At time of publication, his fund had no positions in any stocks mentioned. His fund often buys and sells securities that are the subject of his columns, both before and after the columns are published, and the positions that his fund takes may change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Cramer's writings provide insights into the dynamics of money management and are not a solicitation for transactions. While he cannot provide investment advice or recommendations, he invites you to send comments on his column to
James J. Cramer.