Word: funded
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Dates: during 1980-1989
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...long as Wall Street was blooming, mutual funds seemed to promise the impossible: a place where cautious people could plant their money, ignore it and let it grow, as safely as in a bank but as fruitfully as in the stock market. Millions of new investors could not resist. Take Charles Jayson. Last year the Manhattan retailing executive bought 510 shares in a stock fund managed by Boston's Fidelity Investments (total assets: $75 billion). "I wanted to be in the market," says Jayson, 30, "but I wanted something I didn't have to watch every...
...America's 12 million shareholders in stock mutual funds, these are indeed uncomfortable times. Since the market peaked in August, the assets of equity-based mutual funds have fallen 21.1%, from $234.3 billion to $185 billion. That was a slightly worse showing than the market as a whole, as measured by the Standard & Poor's Index of 500 stocks, which fell 20.9%. Fidelity's flagship Magellan fund, worth $12 billion in August, has shed 31% of its value. Pioneer II, a $4.4 billion fund three months ago, has lost...
...fund shareholders suffered equally when the market splintered. Though the term mutual fund is used to refer to any basket of investments that shareholders own jointly, some bushels contain more perishable ingredients than others. Hardest hit were people who gambled on high-growth funds made up of over-the-counter stocks in small companies. As the market shuddered, many investors quickly dumped such risky stocks and bought into blue-chip issues. Result: even when Wall Street tried to rally, the small stocks were left far behind. The worst performers among the high-growth funds included 44 Wall Street Equity, which...
Some equity funds managed to cut their losses because bearish managers had moved away from cyclical stocks, such as steel and tires, and into defensive shares in food and drug companies, which are less vulnerable in an economic downturn. Some funds that specialize in electric and telephone utilities dropped 12% or less. Other prescient managers had built up their cash reserves, which lowered their exposure to the market and allowed them to pay off any redemptions without being forced to sell stocks at a loss. Says John Neff, who manages the Windsor Fund: "We saw a correction coming...
...savvy fund managers actually came out ahead. The Oppenheimer Ninety- Ten fund rose nearly 8% in the last two weeks of October, largely because it invested in put options, which appreciate when stock prices drop. When the market started to recover, many fund managers began to scoop up bargains. Neff's Windsor Fund, for example, bought $800 million worth of stocks. "When everyone is panicking and stock values are depressed, of such circumstances are opportunities born," he says. "We are buying aggressively, and we will continue...