is growing their earnings at 60%, with very little moves.”
Baxter is a bottom-up stock picker- building her portfolio one stock at a time. The $1.5 billion fund comprises 110 holdings. Its top three industry groups are technology, 40%; health care services,16%; and consumer goods, 13%. It comes as no surprise that the fund’s top five holdings are tech companies: Sawtek, makes filters used in digital wireless equipment; Natural Microsystems provides software and hardware telephone-computer integration; Aspen Technologies makes software that aids chemical and drug companies in the manufacturing process; Video Server–whose clients are both large carriers like MCI, who provide the services, and developers like Picturetel, who make the equipment–makes hardware and software, enabling companies to have multipoint videoconferencing; and Veritas Software provides utility that enhances file and volume management for large servers and sells to larger computer companies, such as Sun Microsystems and Hewlett-Packard.
“We like all the companies because of their growth rate,” says Baxter. Veritas has a 40% growth rate, for example. “They recently completed the acquisition of Open Vision for roughly $300 million, which will enhance their product line as well as their distribution channel. They are selling at $43.75 per share and their market cap is $650 million.”
Taking a contrarian approach, Susan Paluch, managing editor of Chicago based Morning star Investor, suggests buying last year’s out-of-favor funds (utilities, communications and Latin America), selling the most popular ones (real estate, emerging markets and midcap growth) and holding the least popular funds of 1994 and 1995 (precious metals, natural resources, health, convertibles and European).
Her favorite picks are Vanguard Specialized Health Care, Fidelity Utilities, Fidelity Select Multimedia, Franklin Utilities, Flag Investors Telephone, New Age Media, Latin America Equity, Emerging Markets Telecommunications and Scudder Latin America.
In order to hedge domestic stock portfolios and to take advantage of long term opportunities, investors should seek out global funds, advises Gail Perry-Mason, vice president of investments at First of Michigan in Detroit. She also favors real estate, telecommunications and financial services funds.
A GUIDE TO B.E.’S LIST
BLACK ENTERPRISE’s top mutual fund list showcases the best mutual funds from a pool of 9,000. The objective ranking, comprised by Lipper Analytical Services, is based on each fund’s three-year cumulative total return compared with similar funds. We show returns for one-, three- and five-year periods to give readers a perspective on short- and long-term performance.
The funds are listed under 10 separate categories to reflect their investment 0bjectives (i.e., aggressive growth, global and balanced). The net asset value is the total value of all securities held by the fund divided by the number of outstanding shares.
To indicate how much it will cost you to own a mutual fund, we have listed the initial minimum investment, the maximum sales charge and the total expense ratio. The sale fee, which can be as much as 8.25% of the amount you are investing, is listed as a per-centage. Some funds are noload, meaning there’s no fee, while others require lower fees that range from 1%-4%. Next to each fund, we