Sign up today and take advantage of member-only content — the kind of timely, cutting edge industry insight that only Money Management Executive can deliver.
  • Exclusive Online Only Content
  • Free Daily Email News Alerts
  • Asset Management Blogs

At Deadline - Bigger Complexes Do Not Necessarily Translate Into Better Results


Fidelity. Vanguard. JPMorgan. The names of such leading financial companies evoke security and trust. But bigger financial firms don't always mean better performance, according to a study by T. Rowe Price. The study looked at the collective performance of each fund complex's offerings over one, three, five and 10 years ending March 31.

Seventy-nine percent of T. Rowe Price's funds outperformed their peers over the past one and three years, 77% bested their peers over the past five years, and 74% over the past decade.

Vanguard also put in a strong showing, with 68% of this company's funds outperforming their peers over the past year, 76% over the past three years, 79% over the past five years and 82% over the past 10 years.

However, Putnam Investments' funds didn't fare so well, with only 28% of them outperforming their peers over the past year. In the past decade, only 20% did better than their equals.

Principal Financial Expands Bank Connections in India

Principal Financial Group has formed a joint venture with two banks in India in order to sell long-term mutual funds and other financial services in that market.

Principal Financial will own 65% of the new company, Principal PNB Asset Management Co., while Punjab National Bank will own 30% and Vijaya Bank will own 5%. Principal Financial has sold mutual funds in India since 2000, having first entered the market via a partnership with the Industrial Development Bank of India.

More Firms Offer Security Of Lifecycle Mutual Funds

In spite of the recent, strong upturn in the market, investors are still gun-shy and looking for guidance. Lifecycle funds that automatically shift the balance between equity, fixed income and money market holdings as people age have recently gained popularity, and, as a result, more fund companies are offering them - Fidelity, Vanguard, Charles Schwab, T. Rowe Price and Wells Fargo are among the firms offering them.

And with only one in six 401(k) investors making a change to their investments last year, according to Hewitt Associates, these funds may be serving a real need.

More Fund Managers Warn Against New Tech Bubble

Technology funds are up 36% year-to-date, making them the best-performing equity category so far this year, according to Lipper. That's great news, but it has some fund managers worrying that investors might think happy days are here again, a number of financial publications have reported.

Some managers, for example, viewed Hewlett-Packard's recent disappointing results as an early indicator that the tech rally could soon falter. Valuations, particularly in the semiconductor sector, could also present a problem. Overall, technology stocks are trading at an average P/E ratio of 40.

Even more disturbing, Money magazine reports that 119 technology stocks of companies with market capitalizations of $500 million or more have more than doubled so far this year - but a full 40% of them aren't expected to post a profit this year.

Copyright 2003 Thomson Media Inc. All Rights Reserved.

http://www.thomsonmedia.com http://www.mmexecutive.com