| Don't forget that a lot of stocks temporarily really tanked starting
in February and up through about the first part of April, only to
rebound recently. So, the first quarter by itself doesn't necessarily
mean a lot. Ex: Microsoft, now up 47% for the year, bless its heart
:-)
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| re: .3
Don't be too shocked at the performance (or lack thereof) of Stock Fund
B, the Putnam Voyager A fund. It is the classic case of a fund that
invests primarily in small-cap stocks, but has gotten too big in terms
of asset size to be able to accomplish its goal. Money Magazine put
them on a watch list last year, since they and others that have taken
in large sums from investors cannot any longer accomplish their primary
goals.
Plus the types of companies Putnam Voyager invests in (primarily small)
have tanked big time. Let's face it - most of the uptick in the market
has been to the benefit of big stocks such as IBM, Microsoft and
others. Small caps have been beaten down big time during Q1, which
also impacts their 12 month record in a big way.
Chuck
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| In its ratings of 25 April 1997, Morningstar gives Neuberger & Berman Guardian
a four-star rating (above average) for the last five years among all stock
funds. Among this set of funds, it rates Guardian's returns as above average
and its risk as average. (Return and risk are categorized as one of: high,
above average, average, below average, or low.)
However, it's a very different story for Morningstar's three-year rating of N&B
Guardian within the stock-fund category "Large Value". Here our fund has only a
single star, which I believe is the worst 10% of all funds in the categoy. It
rates its return as below average and its risk as high for the 3-year period
among its peer large value funds.
The Morningstar analyst, one Michael Stout, has this to say, dated 04-11-97:
Neuberger & Berman Guardian Fund is moving toward a more aggressive stance,
but the transition is in reliable hands.
This venerable offering has come off a couple of so-so years. Its 10-year
return still makes the large-cap value category's top quintile, but its
1995 and 1996 gains lagged the group averages. The culprits were the
late-1995 and mid-1996 corrections in tech stocks, which dented the fund's
sizable tech stake, as well as last year's weakness in health care.
Some changes are afoot, however. This fund has essentially been divided
among three managers. Larry Marx, who joined the fund in 1988, handled
about a third of it, including most of the technology holdings. He left in
January, so now the fund is split between Kent Simons and Kevin Risen.
Their styles differ somewhat from Marx's. For one thing, while Mark looked
at a company's total cash flow, they prefer free cash flow, which is what
is left after capital investments. That's why they've been swapping cable
and media firms for auto, tech, and health-care stocks. More important,
though, Simons and Risen prefer greater concentration than did Marx, who
owned a lot of small positions. Simons says the number of stocks has so far
dropped to 92 from 124, and that in the future some positions could get as
large as 5% of assets.
Simons and Risen hope their bigger bets will give the fund some extra
punch. So far, things have gone their way. As cable and media stocks have
struggled in 1997, the fund's financials, HMOs, and some of its tech stocks
have performed better overall.
As this fund's 15-year patriarch, Simons has been mainly responsible for
its fine long-term record. Now he has more control over the portfolio than
he has had in years. His style, which Risen shares, may make the fund more
risky--and it was already one of the most volatile large-value
offerings--but it could also help invigorate the fund's return.
I don't have the writeup for Putnam Voyager because it is not covered in the
publication the above opinion comes from, "Morningstar No Load Funds for Blind
Paranoid Investors," to which I subscribe.
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