Lipper Research Senior Analyst Don Cassidy on "Business for Breakfast" 1060 KRCN - Colorado Funds Industry Situation
Q. Don, so often we look at overall funds INDUSTRY trends. Can we looktoday at the Colorado situation itself?A. Sure. And it definitely has CHANGED over recent years...
Q. You mean the move of Invesco to Houston and so on?
A. That was probably the biggest discrete news event, but we have seenmajor changes in the list of players AND shrinkage in fund assets managed!
Q. Well, hasn't the industry itself suffered in asset terms since the topof the 2000 bull market?
A. It has, but the Colorado scene has not recovered anywhere near thenational totals, which are now pushing new all-time highs.
Q. Details on the assets?
A.
- 12/31/00: $212 billion PLUS the departed Invesco funds
- 12/31/01: $157 Billion
- 12/31/02: $110
- 12/31/03: $113
- 12/31/04: $100
- 12/31/05: $96.5
- 2/28/06: $99.98 (call it 100)
Q. Where did all the money go?
A. A lot got vaporized in the bear market, as growth and especiallytechnology funds lost value. Some more left in the form of net outflows.A little came in to new funds and new brands. And of course, withshort-term interest rates dropping until recently, money funds have shrunkas well, not just the growth types.
Q. Why did Colorado's funds business not recover as well as the rest of thecountry's?
A. We are more aggressive in nature than average, and investors have movedfrom growth to value. Obviously, Invesco, which used to be #2, is a netsubtraction. And the trading scandal hurt reputation at Invesco and Janusgoing forward.
Q. What are the biggest local firms in terms of fund $$ under managementnow, then?
A. Overall we have 14 advisors now, which is more than before, but very bigconcentration at the top...
Assets in $billions, 2/28/06
- Janus $79.3
- Marsico 7.6
- Icon 3.8
- Old Mutual 3.4
- Cambiar 1.7
- Westcore 1.5
- Dreyfus-Founders 1.4 cumulative 98.7$B or 98.7%!
Q. Quite a change! No more Invesco or Berger or the GreatWest funds. Whatabout the largest INDIVIDUAL Funds?
A. Top 5, with TNA in $Billions
- Janus Fund $11.6
- Janus Twenty 9.7
- Janus Gro & Incm 6.8
- Janus Worldwide 4.8
- Marsico Focus 4.3
Q. Well, not much change there, with "Janus" names dominating the list...
A. True, but some are shadows of their former size:
Net decline in assets, 12/31/00 to current, $Billions
- Janus Worldwide 28.3
- Janus Fund 27.5
- Janus Twenty 14.6
- Janus Mercury 9.3
- Janus Overseas 4.5
Q. Is there any POSITIVE news... funds that have GROWN in size?
A. Sure.Top 5 growers in $billions, same period:- Janus MidCap Value +4.8 an old Berger fund
- Marsico Focus +2.0 good performance, not the negative bear experience
- Marsico Growth +1.5 ditto
- Janus Forty +1.2 newer fund, none of the overhang of old losses
- Icon Energy +0.9 rise in energy prices; good performance
Q. Overall, has the number of funds been shrinking along with the totalassets?
A. Actually, no. 150 new funds and classes in the period. A lot of it ismultiple classes for marketing purposes. 71 funds had assets shrunk, and 75had assets grow.
We currently have 131 actual funds, vs 95 back then. The current totalincludes 5 closed-end funds, vs 4 back then.
Q. That trend seems a bit contrary, no?
A. Well, it is typical for a maturing industry: product differentiation,adding distribution channels, and so on. And without the newer folks onthe block (Cambiar, Dividend Capital, and Old Mutual) the net total wouldhave been about 27 smaller.
Q. Besides a couple of mergers and the Invesco move, is there anything elsethat has hurt the relative standing of Denver's funs business in recentyears?
A. Well, there are just some structural things... We have traditionally been a no-load town, and that channel hasshrink in relative importance We have been a growth town, and value and bond funds havegained market share We do not have any ETFs managed here, which has been a plus forthe overall industry None of the local companies have created a family of"life-cycle" funds, which have been big asset gatherers.
Q. Is the industry here "OK", though?
A. Definitely. Still profitable. Just not growing strongly as in the wilderdays of last decade.
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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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