The Feeling Is Mutual

A bevy of black-managed mutual funds is bringing new investors into the market, B.E. checks out what they have to offer.

No, this is one revolution that didn’t get televised or much in the way of advertisement, either. At a time when everyone’s fixating on the gyrations of a sky-high Dow, no one has seemed to notice how African Americans have burst into the mutual fund business en masse. With the grand total of black funds now at 16 and counting, days when John Rogers Ariel Growth was the only black fund around–a mere 10 years ago–seem like ancient history.

African Americans didn’t tiptoe into the business. The bumper crop of new funds marks the latest milestone that blacks have made in money management. It all began nearly 20 years ago when municipal governments in places like Atlanta or Prince George’s County, Maryland, handed over some of their pool of pension money to minority firms, thereby giving many black money managers their first breaks. Two decades later, that kind of financial affirmative action has culminated in a roster of African American portfolio managers now ready to take on the burgeoning market for individual retirement plans and savings. “Currently, you have several of us like Maceo Sloan and Eddie Brown managing over a billion dollars in assets,” says Nathan A. Chapman Jr., who started the first of his two funds in 1988. “It was only a matter of time before we made our presence felt.”

Now, African American funds virtually span the investment spectrum. Veterans like Ariel rub elbows with newcomers like the Victory Lakefront Fund. You can choose Highland Growth if you’re looking for companies with zesty earnings numbers or invest with the Profit Value Fund, which stocks up on blue chips.

More important than variety, though, the new funds mark the beginning of an effort to reach out to a long-neglected market, one with staggering potential. According to the Commerce Department, African American households earning $50,000 or more in annual income now number 1.1 million. By some estimates, the black investor market is a veritable gold mine, with some $36 billion in assets to put to work. However, look at just how the community harnesses that wealth, and a different picture comes to the fore. Recent studies show blacks are less likely than other groups to sink their savings into mutual funds or stocks (see “Profiling the Black Investor,” Moneywise, June 1997.) Although part of the reason might be chalked up to African Americans’ tradition of financial conservatism, there’s a feeling that bigger issues are at play. Many in the investment community say the financial industry’s behemoths have overlooked the African American market for far too long.

It doesn’t hurt that the pool of black talent issuing orders to buy and sell stock ranks among the best in the financial world. Barbara Bowles of the Kenwood Growth and Income Fund or a John Rogers, who guides Ariel, boasts 10 years Or more or experience overseeing pension fund money for corporations and local governments. Randall Eley, the money manager at the helm of the Profit Value Fund, has averaged a total return of 22%

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