Lipper Research Senior Analyst Don Cassidy on "Business for Breakfast" 1060 KRCN Tuesday - A Look at Colorado Funds
Tuesday, August 23, 2005
Q. Don, we've been talking about some big-picture ideas lately. Today,could we take a local look at how funds are doing?A. Sure! You're right: we have not done this in quite a while.
Q. What is a good performance window to use for such a look?
A. I would say probably three years, since it smoothes out any veryshort-term events or hot and cold streaks. Also, we are now just over threeyears past the major market bottom back in July 2002.
Q. OK, so what do you see in terms of the Colorado funds scene?
A. Well, of course in the recent past we have seen the merger of Bergerinto Janus, and the absorption of Invesco into AIM, and its move toHouston. And the Aristata funds have merged with the Westcore funds.
Q. And how are local funds looking in terms of relative performance?
A. Pretty good, overall. In terms of Equity funds, there are 69 that havebeen around for the whole past three years, and 37 of those have beatentheir peer-group averages -- so a little better than half are winners.
Q. Probably the big question in many people's minds is "how is Janusdoing?"
A. Right. They still have by far the greatest asset base of localcompanies. Good news: of the 29 equity funds they have had for the pastthree years, 17 are performing above their peer averages. That again is afew above half.
Q. Would you say they have turned the corner, then?
A. They certainly seem headed in a positive direction. One thing that thesenumbers will not tell us is what the causes of their improvement are. Is itnew portfolio managers, new management, new disciplines, or just the factthat they are more aggressive than average and we have been in an up ratherthan a down market? Probably each of those played a part.
Q. Can you give some examples of Janus funds that have done well?
A. Sure. In raw terms, in a time when the S&P 500 was up about 33% and theDow about 25%, their best single performer has been the Janus ContrarianFund (Multi-cap core), up 77%. Just a tad behind is Janus Venture(Small-cap core), up 76.6%.
Q. You spoke before about beating their peers?
A. Right. A return number does not mean a lot in isolation. It is best inmarket context, in competition with similar funds, adjusted for risk, andso on.
Q. What are some of the Janus funds that have done best against theirpeers, then?
A. The well-known Janus Twenty is up 47.6%, against just 24.6% for theLipper Large-Cap Growth index.
- Janus Orion is up 68% against Multi-cap growth peers at +41%.
- Janus Contrarian is up 77% vs its Multi-cap core peers at 41%.
- Janus Mercury (Large-cap growth) is up 40% against a group average of 24.6%.
- But Janus Fund itself (+22.5%) slightly lagged that peer group.
Q. How about some of the other shops? Which have been most outstanding?
A. Marsico gets a clean sweep: all four of their equity funds have beatenpeer averages over the past 3 years to last Friday:
- 21st Century (+60.3% vs +41% for Multi-cap core)
- Growth (+38.6% vs 24.6% for Large-cap growth)
- Focus (+34% vs 24.6% for Large-cap growth)
- Int'l Opptys (barely beat its average: +57.9% vs +56.8%)
Q. Others worth mention?
A. American Growth Fund, featured recently in an article in one of theDenver newspapers, is up 28% vs 26% for its Large-cap growth peers. Fromthe bottom of the bear market, 28% might not sound like much, but bothLarge- and Growth have been the laggard areas!
Q. How about the Icon funds? They have been gaining assets, right?
A. Yes, they have had positive flows. I think their value discipline hashelped a lot in the recent climate. Six of their 13 funds beat their peeraverages. And they have the number 1 fund in the state in Icon: Energy, up131% vs a peer average of +112.7%. Their International Equity fund (+90%)has beaten peers by 34 points, and their Healthcare fund (+58.5%) hastopped its group by 14 points on average.
Q. What about Founders? We don't hear much of them any more...
A. Dreyfus/Founders had four of their eight funds beat peers over threeyears, but not by big margins. Their top fund was of course Passport, theinternational equity fund, up 102%, but it actually lagged its peer groupby 7%. Still, 102% in three years is very pleasant.
Q. Anything worth mentioning over at Westcore?
A. Sure. They are a more conservative shop than average, and had threepeer-beaters out of seven. Their Mid-cap Value fund was up almost 73%,which beat its peer group by 9.5 points in this latest three years.
Q. So Colorado as a funds industry place-- how would you characterize itnow?
A. Maybe not the Mecca it once was, but clearly quite alive and well.
Q. Thanks Don!
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Don Cassidy is a Senior Research Analyst at Lipper specializing in fund flows, exchange-traded funds, (ETFs), closed-end funds, equity fund performance, and author of Trading on Volume (McGraw-HIll).
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