MutualFundWire.com
The insiders' edge for 40 Act industry executives!
an InvestmentWires' Publication
an InvestmentWires' Publication
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MutualFundWire.com
The insiders' edge for 40 Act industry executives!
an InvestmentWires' Publication |
|
Monday, June 7, 1999 S&P's Newest Select Funds *List at end of article* Standard & Poor's today announced the latest group of Select Funds, identifying 19 funds with consistent superior performance and quality of management in the small-cap value category. The small-cap value list is the fourth group of Select Funds identified by Standard & Poor's, and signifies the company's first appraisal of funds that utilize a predominantly value-investing approach. Select Funds are identified in a new sector each month. The next sectors will be mid-cap value in July and large-cap value in September. "The performance of small-cap value funds has greatly improved in the last few months," said Philip Edwards, managing director at Standard & Poor's Fund Services responsible for the Select Funds. "Small-cap value stocks were the best performers overall during May, up 3.99%*. Nevertheless, in the longer term, they still lag behind large-caps stocks, although they have outperformed small-cap growth stocks in this time." The 19 Select Funds in the small-cap value category have underperformed the Standard & Poor's SmallCap 600/BARRA Value Index over the past five years, returning an annualized 12.97% compared with the benchmark's average annual gain of 16.54%. The S&P 500 index returned an annualized 25.87% during this period. Over the last year, however, small-cap value stocks have declined by 9.46% while the small-cap value 'Select Funds' have declined by only 5.2% overall. This compares against a 5.37% decline in small-cap growth stocks and a 21.03% gain in the S&P 500. "Just looking at past performance is no longer sufficient for most advisers and investors, and the Select Fund process goes beyond this, to take into account the quality of the fund's management," Edwards noted. "For those funds that pass the quantitative screen, we conduct in-person interviews, focusing on the experience, expertise, and style of the fund manager, the stability and depth of the fund management team, and also of the fund sponsor organization," Edwards continued. "We also analyze the fund's current and historical holdings to ensure that they match the stated philosophy and requirements of the fund." Once the Select Fund status has been designated, the funds are kept under monthly surveillance to ensure that the managers are continuing to adhere to their polices. The funds designated as 'Select' are those that, in the opinion of Standard & Poor's Fund Services, can clearly illustrate that the past performance is directly attributable to the deliberate and disciplined activities of the management team, rather than luck.
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