Mutual Fund Firms Deliver Solid Stock Market Returns
December 12, 2005
Driven by 401(k) contributions and the increasing popularity of exchange-traded funds, stock sales of major mutual fund companies have significantly outpaced those of more traditional stocks and bonds, according to a report from USA Today.
Lipper's Management Company Index, which gauges the success of the nation's largest publicly traded mutual fund company stocks, has surged 15.3%, versus a 3.5% gain for the S&P 500 in the last three months.
Interestingly, fund shops caught in the recent scandal have rebounded to become among the most profitable. For example, after watching its value tumble nearly 74% during the last bear market, the stock of Janus Capital took another hit when regulators slapped it with a $225 million fine for its role in the scandal. In the last three months, however, its stock is up 32.6%. Alliance Capital saw its stock value go from $9.1 billion to $1.5 billion during the bear market and then, in 2003, it had to pay $600 million in regulatory fines. Since September of this year, its stock is up 23.9%.
"In both companies, it seems like performance is improving," said David Haas, an analyst at Fox-Pitt Kelton in New York. Janus, Legg Mason and AMG rank as three of Haas' favorite fund stocks.
Another outstanding performer is precious metals fund manager U.S. Global Investors. The shop has witnessed, on average, a 20.5% increase in its stock value this year.
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