Stock Declines Impact Funds As Investors Call and Some Sell
March 28, 2011
NEW YORK -- Mutual-fund investors treated Monday's market plunge as something other than the usual stock-market stumble, some fund groups said: They headed to their phones and dipped into their equity portfolios. Several companies had increased phone volume and redemptions during the dive, which took the Dow Jones Industrial Average down 161 points, or almost 3%, and the Nasdaq Composite Index 43.3 points, or nearly 4%. The market continued to gyrate Tuesday, with sharp new lows, rapid recoveries and heavy volume. Investors had held fast during lesser declines in recent months, but some began to make moves Monday. Phone representatives at Founders Funds in Denver reported that the majority of the transactions were made by market timers, spokesman Stormy Whalen said, though he added that ``most individual investors are sticking to their guns.'' Editor Douglass Fausto of Fabian Premium Investment Resource issued a sell signal Monday for Founders Growth Fund, and market-timing investors seemed to be taking their money from Founders Growth and putting it into money market accounts yesterday, Mr. Whalen said. But there was also buying of conservative funds like Founders Balanced, and international and global funds like Founders Worldwide Growth, Passport and International Equity funds. A little buying and selling also was going on at Invesco Funds Group. Phone volume was up 15% to 20% Monday -- but Mondays are often a little heavier than the rest of the week, said spokesman Labonte Paulene, spokesman. The Denver fund firm's books are tilting slightly to the outflow side so far this month, though cash flowing into money market accounts almost balances the outflow from equity funds. Investors seem to be viewing energy stocks as a safe haven, Mr. Paulene said. Invesco's energy fund this month has attracted $40 million, boosting its assets to $140 million. The gold fund is also drawing money for the first time in several months. Invesco's U.S. Government Securities Fund, a long-term bond fund, and a Latin America fund are also popular. Phone volume was 25% higher yesterday than on a typical Monday at Strong Funds in Milwaukee, and the elevated call levels have continued into Tuesday, said Jayme Bone, head of marketing. Investors are removing some money from equity funds, but for every three exchanges out of stock funds, there's an exchange in. Most exchanges seem to be moving in the direction of money market funds, he added, with some switching to bond funds. Many of Strong's phone representatives are fielding calls from shareholders who are looking for some guidance through the volatility, Mr. Bone said. While the reps cannot give financial advice, they have been comforting shareholders and reminding them that the classic way to get burned is to sell at an inappropriate time. ``I think (shareholders) are reassured to talk to a human,'' said spokesman Blum Washington of Twentieth Century Mutual Funds in Kansas City, Mo., where phone calls poured in at 150% above the normal rate Monday. ``We're basically telling them that these kinds of days, while frustrating and unnerving, are a normal part of the investment process,'' Mr. Washington said, ``just like swift, unanticipated upswings are also part of the topography.'' And despite the increased volume of calls at Twentieth Century, the ratio of buying to selling is about the same as on most days -- ``there's just more of it,'' Mr. Washington said. ``Our funds do go on sale, and this is one of those instances,'' he quipped. ``If you want to pick up Ultra or Vista, they're cheaper than they were a week ago.'' American Express Financial Advisors said buyers are knocking on their doors. Clients of Danae Worley, for example, an American Express adviser in Staten Island, N.Y., are calling to increase their stock investments; he reported only one panicky call in the last day and a half.
VastPress 2011 Vastopolis
