Word: mutuals
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Dates: during 1980-1989
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...didn't want to panic." But he found himself constantly dialing Fidelity to check on his holdings. The line was usually busy. On Oct. 20, the day after Black Monday, Fidelity was fielding six calls a second. "Then it hit me: Why am I acting like this over mutual funds? They're not supposed to be exciting. They're supposed to be dull and safe." Though he did not sell, he is no longer sure his money is secure. Sighs Jayson: "The comfort factor is gone...
...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...
Though seasoned investors vowed to wait out the market, many newcomers who had never heard a bear market growl found the sound just too menacing. During the last two weeks of October, shareholders drained a total of $13 billion out of stock mutual funds. Of that, $9 billion flowed into money-market funds, which hold Government securities, bank certificates of deposit and other sturdy investments. At Franklin Resources in San Mateo, Calif., redemptions in October reached $550 million, a level more than three times as high as in a typical month. "It was a stampede," said Monte Gordon, director...
...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...
...most mutual-fund companies could not take full advantage of those opportunities. Many exhausted their cash reserves and had to sell stocks or borrow from banks to meet redemptions. Even so, no companies were mortally wounded. Diversification helped large firms like Fidelity, which has 4.7 million accounts in more than 100 different funds. Some 98% of the customers who cashed in shares of Fidelity stock funds merely transferred the money into the company's other funds, including money-market accounts...