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BUSINESS A25
Monday 5 October 2015
Mutual fund trends: Give stock pickers a chance?
STAN CHOE cording to S&P Dow Jones of something when things Capital Group, whose ber of Capital Group’s
AP Business Writer Indices. The numbers are can turn around, propo- American Funds is the third- management committee.
NEW YORK (AP) — Bad similar for funds focusing on nents say. The last few largest fund family, points That’s why he suggests in-
news keeps piling up for mid-cap stocks, small-cap years have been tough to how some active man- vestors look not only at ex-
stock pickers, but not ev- stocks and other areas of for stock pickers because agers have a better history penses when choosing a
eryone is giving up on the market. big stimulus efforts from the of minimizing losses during mutual fund, but also how
them. it performs during down
The majority of actively In this Aug. 25, 2015 file photo, specialist Michael O’Mara works on the floor of the New York markets and whether its
managed mutual funds managers invest in the
continue to fall short of in- Stock Exchange, in New York. Associated Press fund themselves.
dex funds, and investors — Is a fund manager from
are voting with their feet, By keeping expenses low, Federal Reserve have lifted down markets. Not only an Ivy League school bet-
pulling out billions of dol- index funds have a built- all stocks, says Lisa Shalett, does that help support the ter?
lars from those funds every in advantage over many head of investment and funds’ long-term returns, it Mutual fund managers
month in search of cheap- other funds, and investors portfolio strategies for Mor- may also help keep skittish who went to Harvard and
er and better options. De- have noticed. They’ve gan Stanley Wealth Man- investors from jumping out other elite universities tend
fenders of portfolio man- pulled more than $150 bil- agement. and selling low, only to miss to make more money for
agers say the moment lion from actively man- With the Fed’s bond-buy- a subsequent rebound. their investors, but it may
may be nearing when they aged U.S. stock funds over ing program over and the “If you can moderate that have nothing to do with
prove their worth: when the last year, according to first increase in interest swoon, if you can make it smarts.
markets get shaky. Morningstar. Much of that rates in nearly a decade a little less painful, you in- Instead, it’s likely about
This week, we take a look at has gone into index funds. approaching, Shalett says crease the chance that connections, say research-
actively managed funds, Yet it’s often just when ev- stock pickers may be able people stay invested,” says ers from Nanyang Tech-
strategies for stabilizing a eryone has become sick to differentiate themselves. Rob Lovelace, senior mem- nological University in Sin-
portfolio in rocky times and gapore and the Univer-
other trends from around sity of Texas at Austin. They
the fund industry. looked at why managers
— Give stock pickers a from top schools tend to
chance? have slightly higher re-
Trying to beat the market turns, about 0.6 percent-
has long been a losing age points per year. They
proposition. traced much of it to re-
Over the last decade, in- lationships the managers
vestors would have been have with investment bank
better off with an index executives, many of whom
fund that tracks the Stan- went to those same top
dard & Poor’s 500 than the schools. Those relationships
vast majority of large-cap mean fund managers from
mutual funds run by stock elite schools get more ac-
pickers. Only 20 percent of cess to hot initial public of-
actively managed large- ferings of stock, ones that
cap funds managed to often result in a jump of 10
beat the index over the percent or more on the first
10 years through June, ac- day of trading.q
Bernanke: Wall St execs should
have gone to jail for crisis
WASHINGTON (AP) — For- day, Bernanke said he Federal Reserve is not a This Jan. 16, 2014 file photo, Federal Reserve Chairman Ben
mer Federal Reserve Chair- thinks that in addition to law-enforcement agency. Bernanke speaks at the Brookings Institution in Washington.
man Ben Bernanke says the corporations, individu- Bernanke is promoting
some Wall Street execu- als should have been held his new 600-page mem- Associated Press
tives should have gone to more accountable. oir, “The Courage to Act:
jail for their roles in the fi- “It would have been my A Memoir of a Crisis and writes that the taxpayer- Street and I had no rea-
nancial crisis that gripped preference to have more Its Aftermath,” which is provided bailouts of banks son to want to bailout Wall
the country in 2008 and investigations of individual scheduled to be published and Wall Street firms were Street itself,” he told USA
triggered the Great Reces- actions because obvi- Monday. hugely unpopular, but says Today. “But we did it be-
sion. ously everything that went He began the book after they were necessary to cause we knew that if the
Billions of dollars in fines wrong or was illegal was leaving the Fed in 2014. avoid an economic ca- financial system collapsed,
have been levied against done by some individual, The memoir details his tastrophe. “I certainly was the economy would imme-
major banks and broker- not by an abstract firm,” take on the crisis in which not eager to bail out Wall diately follow.”q
age firms in the wake of Bernanke said. the government took over
the economic meltdown Asked if someone should mortgage giants Fannie
that was in large part trig- have gone to jail, the for- Mae and Freddie Mac
gered by reckless lending mer Fed chairman replied, and provided hundreds of
and shady securities deal- “Yeah, I think so.” He did billions in aid to the biggest
ings that blew up a housing not, however, name any U.S. financial institutions.
bubble. individual he thought The Associated Press ob-
But in an interview with should have been prose- tained an early copy of
USA Today published Sun- cuted and noted that the the book last week. He
