Beebe Fund plans liquidation
December 14, 1998
A combination of poor performance in the financial services sector, a rush of redemptions and the death of the fund's manager has caused the Beebe Fund to file to liquidate.
The year-old Beebe Fund, one of the seven pure no-load funds of the C/Funds Group, will distribute all its remaining assets before year-end, pending shareholder approval.
The poor performance of the financial services sector, the equity fund's core sector concentration, has hurt fund returns, precipitating redemptions. At the same time, the fund has been struggling to "find itself" after the loss of its portfolio manager, according to a recent proxy filing. Samuel J. Beebe, the portfolio manager for whom the fund was started, died of an apparent heart attack this past June, just six months after the fund was first introduced. Fund management did not return calls seeking comment.
Roland G. Caldwell, president of Omnivest Research Corp. of Venice, Florida, the adviser to the C/Funds, has been managing the fund ever since. But according to the Beebe Fund proxy statement, the fund has been losing assets since Beebe died. According to Lipper Analytical, the fund's assets peaked at $1.6 million this past May but dropped to $750,000 as of Oct 31. As a result, the fund is no longer viable, according to the proxy. The fund closed to new assets immediately after Beebe's death.
Poor performance added to the fund's problems. According to Lipper, year-to-date 1998 through October 31, the Beebe Fund returned -11.59 percent vs. the sector average return of 2.89%.
Fund advisers choose full fund liquidation for a variety of reasons, and usually as a last resort after considering possible funds to merge with, and stepped up marketing efforts. Moreover the loss of even a star portfolio manager does not necessarily mean a fund can not survive. It can be an entirely different matter, however, if a fund was created for a particular manager to run, according to his investment style.
The Beebe Fund was introduced in December, 1997 to capitalize on the expertise of Sam Beebe, a former vice president of research for financial institutions and a banking analyst since 1982. Though fund filings show that Beebe had no prior experience managing a mutual fund, he had been part of an equity management team investing for individual accounts.
The C/Fund Group has a reputation for being innovative and creating niche funds. Its well-known board of advisers includes Arthur B. Laffer, an economist who served on former President Reagan's Economic Public Advisory Board and is credited with being one of the architects of "supply side" economics; Jude Wanniski, a political/economic consultant and formerly an adviser to former President Bush, and Manuel Johnson, an economist and former vice chairman of the Federal Reserve Board.