Value Funds Continue Winning Ways

September 5, 2001 (PLANSPONSOR.com) - Value funds are chalking up the strongest returns among domestic equity funds so far this year, Standard & Poor's reported Wednesday.

This year, the market has moved toward value investments and away from growth amid investor concerns about a weak economy and poor earnings, said Rosanne Pane, mutual fund strategist for Standard & Poor’s.

Gains for the value style through August contrast sharply with the disappointing drop of 15.4% for the average domestic equity fund with assets of more than $2 billion.

In August, the overall market favored defensive segments such as consumer staples, real estate, and gold shares, according to Pane.

On the flip side were the economy’s growth drivers — telecommunications services and technology — which suffered the sharpest declines in August, Pane added.

The broad market performance was tepid through August, as the S&P 500 gave up 13.5%. And the tech sector’s meltdown is evident in the NASDAQ’s 26.9% plunge.

Value Managers- Portfolio Holdings

The leading managers in this month’s review range from self-described “vulture investor” Martin Whitman at Third Avenue Value Fund to the more-cautious Joel Tillinghast at Fidelity Low Priced Stock Fund.

Third Avenue’s Whitman has focused on some of this year’s more beleaguered areas, including electronics and Japanese blue chips, the fund’s two largest sectors.

Whitman’s patience has apparently paid off with rebounds in natural resources and real estate, his fund’s third-largest weighting. Third Avenue ranked tenth among the 207 funds screened, with a return of 3.1% through August.

On the defensive side, Tillinghast stuck with a hefty weighting of 24.2% in consumer discretionary stocks, while limiting telecom services exposure to a modest 0.7% stake.

Apparently betting that consumers are still dining out, the fund’s second and third largest stock holdings are Outback Steakhouse and Applebee`s Intl., behind D.R.Horton (DHI), a household durables producer, the fund’s largest holding.

 

«