Best Fund Wealth Builders & Destroyers

The one subject I've tried to get into and just haven't been successful to share with you is the crystal ball method of money management on where this market is going. The broker-dealer I'm licensed with pays for an advisory service that gives the brokers an idea on where the market is since many times we, as brokers, can't. Each Tuesday we get together over out phones and computer screens for a webinar and review what happened the previous week and what we can look forward to looking...well, forward. Lately this service has signaled that the market is in a 'bear confirmed' mode but that's confusing since ever since it signaled a bear the market has moved substantially higher. I expect it will move lower in certain sectors before re-starting the climb back up. This is healthy for the markets since it gives either buying or selling opportunities and nothing moves in a straight line forever.

But because my crystal ball has some electronic fritz that prevents me from being a full fledged card carrying investment soothsayer like so many of my brethren who know absolutely everything, I rely on mutual fund managers to help lead my clients safely through the financial mine fields. It's a lot easier doing research this way and its worked fairly well until 2009. For those of you who remember 2008 rolled into town like a sailor on a weekend bender and couldn't get its bearings. I invited one of the smart guys from American Funds to talk to my clients and he informed us that the market malaise in 08 would be short, a Democrat would be elected and everything would be swell (not exactly his words but close) by the Fall of the year. Well, if you're going to be wrong you may as well be really wrong because he was and so was the entire industry.

Since a good portion of the invested assets of my clients are with the American Funds there was a good amount of angst upon my clients and myself until the March 2009 recovery, or bottom, depending on your viewpoint. Naturally no one really knew that was the bottom but certain smart people now say they knew, which of course they didn't.

One always second guesses oneself when anything happens that disrupts and investment plan and I wasn't different.

While all this was going on I preached two things to clients: One don't sell into the panic and Two hold your current investments until we have some recovery. Most of my clients listened. Strangers who came to me thought I was nuts.

It turned out it was good advice. It wasn't anything special, it was common sense.

Now is the time of year when reports are made on which mutual fund family created the most wealth and which fund families were the biggest wealth destroyers over the previous decade. But before I report on that I have to remind you that the hottest fund family in the 90s was Janus. It collected 20% of each mutual fund dollar. In other words out of every five bucks one went to Janus. People wanted big returns, did not care about risk, and Janus was the address you went to. I remember several people telling me to go peddle fish, or worse, because the returns our portfolios were making did not come close to that of Janus.

So who had the worst 10-year wealth destroyer record? Why it was Janus Capital Group, Inc. with an investor loss of $58.4 billion. Putnam Funds came in as number two and flushed away$46.4 billion of investor hard earned money and Invesco AIM lost $10.1 billion.

Like my favorite college football play-by-play announce Keith Jackson used to say, 'Whoa, Nelly!'

And the best Wealth Creators? Listed in order American Funds $191 billion, Vanguard $189 billion and Fidelity $153.1 billion. Of course there is no guarantee that these folks can do it again but a winning 10-year record with two of the biggest meltdowns in economic history sandwiched in the last decade counts for something. Remember, these were the best of ALL fund families. The cream, the bestest, the ones you'd want to buy today if you hadn't already. And before you pooh-pooh this report remember these funds beat out such outstanding managers as Legg Mason, T Rowe Price, Templeton and PIMCO, as just a few quality managed funds.

Now before one of you smarter than me folks steps up and says something like size matters, I agree. Those funds did the most because they were the biggest. Which is why annualized returns of all the funds counts for something and American Funds returned 4.1%, Vanguard 2.9% and Fidelity 2.1%.

I report a lot of bad and serious news and today I just wanted you to know we did good and I am really happy.

If you have questions about anything contained in this blog write Paul Stanley at pstanley@westminsterfinancial.com or call 877 783 7080. Please pass on this blog and address to someone who you think could benefit.