Sales are surging as bulls charge
By mutual fund industry standards, the Janus Fund is fairly small. But by any measure - whether in sales or incoming telephone lines - its growth in the past 12 months has been rapid, to say the least.Skip to next paragraph
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In August 1982, when the US stock market began its historic bull run, the Denver-based fund had some 5,000 shareholders and was investing about $40 million of their money. A year later, reports Gordon Yale, Janus's secretary-treasurer, there were more than 32,000 shareholders with some $275 million under management - a more than sixfold increase in both shareholders and assets.
''We've had to triple the number of people in our phone room'' to handle the added inquiries and orders, Mr. Yale reports. In addition, a new phone system, including three new toll-free lines, had to be installed to handle the extra calls.
Even for this industry in this unusual year, the Janus experience may be extraordinary, but its efforts to deal with growth are not. For in 1983, millions of Americans are fondly embracing mutual funds. No longer appealing to just a small, fairly conservative share of the population, mutual funds have become the saver's route to the world of investments.
Only a few years ago, these people went through the mental adjustments needed to switch money from passbook savings accounts to money market funds earning 15 to 17 percent. Now, many of them have begun to heed the fund companies' urgings to switch part of this hoard to equity, or stock-based, mutual funds.
While growth figures for all mutual funds may not be as large as at Janus, they are still impressive:
In August 1982, reports the Investment Company Institute, the industry trade group, assets of all funds (except money funds and short-term municipal bond funds) stood at $62.2 billion. A year later, these assets reached $104.5 billion. While part of this is the result of the increased value of stocks in the funds' portfolios, it still represents one of the largest sales-generated gains in mutual fund history.
''A year or so ago, (the industry) usually had sales of $1 billion or so each month,'' said ICI spokeswoman Lisa Swaiman. ''Now, sales of $3 or $4 billion a month are commonplace.''
Behind these encouraging numbers is a changing profile of the mutual fund shareholder.
''The profile of the mutual fund investor is a lot different,'' observes Burton Berry, publisher of NoLoad Fund*X, a mutual fund newsletter. ''They're better educated, more sophisticated.'' This is one reason, he says, for the increased interest in no-load funds, where purchases can be made without a sales charge. ''The people coming into funds now are able to make decisions without an agent.''
''There's a much broader range of interest in mutual fund investing than there was a few years ago,'' asserts Marshall B. Front, a partner at Stein Roe & Farnham funds and president of the No-Load Mutual Fund Association. ''Many people who had confined their savings to banks . . . have moved capital to the mutual funds.''
''I don't think the average age has changed that much yet,'' Mr. Front contends. ''But in the future, you'll see the profile move to a younger range.''
These younger shareholders are a more daring lot, too. They are much more willing to shorten investment time frames and take greater risks to win big gains.
''I see more people going into aggressive growth funds,'' notes Richard Curry , director of financial services at Prescott, Ball & Turben, a Cleveland brokerage. In fact, the ICI's Ms. Swaiman reports, 1983 sales of aggressive growth funds reached $1.1 billion through August, compared with $600 million in the same eight months last year.
Perhaps surprisingly, observers note, much of the money going into the speculative funds is in individual retirement accounts (IRAs), the kind of vehicle where one would expect security to be paramount. Many of these IRAs, however, are opened by people in their 20s and 30s who feel they have time to correct any mistakes that might result from greater risks.
''An awful lot of it (mutual fund investing) is IRAs, which are usually younger customers,'' confirms Frank Parrish, vice-president at the Fidelity Funds. IRAs' long-term investment goals and the ability to switch mutual fund money from one fund to another until retirement - all without incurring tax liability - fit in nicely with the funds' promotion efforts.