THE WORD OUT
That hasn’t stopped the number of new funds from rising. By industry counts, 237 new mutual funds opening shop since January 1 have boosted the total to 6,540, up from 2,900 in 1990. Still, once up and running, getting recognition as simple as a daily listing in the newspaper is a struggle. “I’d say the toughest thing for us was getting the $30 million in assets or 1,000 shareholders we needed to break into the financial section,” says John Rogers, the unofficial dean of African American mutual fund executives. Another source of free publicity is shut off to fledgling funds as well. Morningstar, the Chicago company that tabulates tomes of statistics and investor-friendly reviews that many financial planners and individual investors swear by, doesn’t review a fund until it’s been around for three years.
There are ways to get free spotlight, however. For Holland, Brown or Eley, an appearance on TV’s Wall Street Week or the Nightly Business Report, prompts curiosity and a few phone calls, leading maybe a month later to a few thousand in new investments. Bowles saw a May story in Essence magazine prod a few dozen callers to ask for a fund prospectus. Then again, there are other ways other fund managers are getting their financial skills to the masses. As a subadvisor for the Calvert Managed Growth and Dreyfus Third Century funds, Maceo Sloan’s NCM Management lends its management prowess to bigger firms. Rob Lamb, head of the Highland Growth fund, meanwhile, plans to meet with financial planners often and regularly, using a little one-on-one time to keep them abreast of his fund and to help disseminate news to investors.
WHAT’S THE CATCH?
So just how does a small investor like you actually safeguard your savings with some of the newer funds out there? Rest assured: the SEC and state regulatory agencies have your back, teaming to monitor funds on a federal and state level. Funds are required to file paperwork regularly, and must foll
ow guidelines on everything from prospectuses to reporting results.
A little homework on your part doesn’t hurt. We suggest you call to get a fund prospectus and go over the fund manager’s record closely; you’ll want to know that he or she has a solid track record. Further, it’s good to know that the fund manager you’re betting on has a solid institutional investing business–at least $100 million under management- -that will generate enough money to keep the fund going in those first years.
Don’t cry for the little guys. Retirement money keeps pouring into mutual funds by the truckload. Morningstar’s head, Don Phillips, estimates that most funds, whether long-established or new-minted, stand about a 90% chance of surviving, a sentiment that a recent study by the Federal Reserve seems to underscore. There are also signs that interest is starting to stir on Wall Street. In one recent deal, American Express took a 40% stake in Maceo Sloan’s money management firm. But perhaps most assuring is the tenacity African American managers bring to