A fine year for funds

Mar 9, 2010 — The Boston Globe

Steven Syre

Mar. 9, 2010 (The Boston Globe delivered by Newstex) --

Happy anniversary.

The stock market hit rock bottom a year ago today, a dismal moment in time that became the starting point for one of the great bull market runs in history. Stocks remain far from their old peak prices, but they have regained an enormous amount of value over the past 12 months.

Some brief measurements: The Standard & Poor's 500 index, the most important yardstick in the mutual fund world, has climbed 72 percent over that period. The Nadsaq index has soared 85 percent, and the Russell 2000 index, which tracks the fortunes of smaller stocks, has rocketed 97 percent. That's a rally.

It's been a great year to be a mutual fund manager. Even laggards among diversified stock fund managers could have earned a return of 50 percent over the past year. How many shareholders would really complain about that?

In fact, the average fund manager has performed even better than the market. An assessment of more than 8,000 diversified stock funds by Morningstar Inc. (NASDAQ:MORN) showed the average manager earned 76.4 percent for shareholders over a one-year period ending last Friday, slightly better than the S&P 500 performance.

Boston funds produced plenty of above-average numbers over the last year. But who was best? Hands down, that distinction went to Michael Weaver and his Fidelity Select Automotive Portfolio fund.

Weaver, who took over the fund in February last year, earned 277 percent over the 12-month period that ended last week. Auto stocks, left for dead a year ago, were hard to beat.

But that's hardly a fair contest. So I divided stock funds two ways, by size and investment style. That separates funds that own shares of small, medium, and large companies. Mix those with growth, value, and blended investment styles, and you come up with nine fund categories.

Fidelity funds earned Boston's best results in five of the categories. Putnam Investments funds were tops in two categories, and MFS Investment Management came out on top in one. I omitted one category, value investors who buy large-company stocks, because no locally managed fund performed anywhere near the top of industrywide rankings.

Many of those top eight Boston funds earned triple-digit returns, including Fidelity Small Cap Stock (127.3 percent), MFS New Discovery (116.6 percent), Fidelity Value (115.2 percent), Fidelity Dividend Growth (107.4 percent), Putnam Small Cap Value (108.4 percent), and Putnam Voyager (105.1 percent).

The largest stock fund managed in Boston, the $63 billion Fidelity Contrafund, earned a mere 58 percent over the same period. As I said, who's really going to complain?



If you didn't get your fill of the movie business on Oscar night, a lawsuit kicking around Suffolk Superior Court might grab your attention.

Brickyard Filmworks, of Boston, sued another local company, Zero VFX, and three individuals two weeks ago, alleging the kind of business skullduggery a Hollywood mogul could appreciate. At risk: expensive work producing visual effects for two local movies due out this fall, ``The Zookeeper,'' starring Kevin James and Adam Sandler, among others, and Ben Affleck's ``The Town.''

Three principals at Zero VFX, Brian Drewes, Marc Sadeghi, and Sean Devereaux, all worked at Brickyard Films last year while the film business in question was put out to bid, according to the lawsuit. They get involved in talks about the work, but proceed to ``undermine Filmworks and misappropriate its business,'' the lawsuit said. By January this year, the trio are gone, working at their own competing business, and Brickyard ends up with neither of the contracts.

A lawyer representing Brickyard didn't return a call yesterday. Zero VFX doesn't have a phone listing at the address it reported on state incorporation records.

The Red Herring

Bain Capital, of Boston, hopes one of its private equity investments will become a public company this week. Sensata Technologies Holding NV is scheduled to raise as much as $632 million in an initial public offering. Price estimates for the offering would value Sensata at as much as 177 percent more than the $3 billion Bain paid for the company three years ago.

The Baupost Group is by far the largest hedge fund firm in Boston, according to a survey by Pensions & Investments. Baupost and its president, Seth Klarman, rank 11th nationally, with $20 billion in assets under management, the publication said.

Steven Syre is a Globe columnist. He can be reached at syre@globe.com.

Newstex ID: BGL-1035-42693183