Q. My wife and I have individual retirement assets invested primarily in Janus Core Equity Fund. Due to its poor performance, we’re considering transferring our money out of it. What do you think?
P.Q., via the Internet
A. While not a highflier, it’s among the best of its group.
This relatively conservative fund still fits well as a basic holding in an individual’s portfolio. The recent problems are due to the fact that large growth funds in general haven’t performed well.
The $817 million Janus Core Equity Fund (JAEIX) is down 16 percent the past 12 months and had a three-year annualized return of 0.75 percent. While obviously not the sort of results an investor would seek long-term, they’re still within the top 10 percent of all large growth funds.
The fund was quite aggressive when initiated in 1996. To reduce its risk when she took charge in early 2000, portfolio manager Karen Reidy cut back significantly on the fund’s technology holdings. She has mixed some reasonably priced value stocks in with its growth holdings.
Reidy has generally beaten the returns of the Standard & Poor’s 500, with less volatility.
“I think some people who automatically believe owning a Janus Fund always gives you a real growth-oriented fund might want to reexamine this one because it doesn’t have that strong growth exposure,” said Catherine Hickey, analyst with the Morningstar research firm.
This “no-load” (no sales charge) fund requires a $2,500 minimum initial investment.
Q. My daughter is 17 years old and has $4,000 in a savings account. She wants a better return, but also wants to keep her money fairly liquid. Any suggestions?
G.S., via the Internet.
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A. If you’re thinking liquidity with the best yield you can get, you’re talking about a money market fund or very short-term bond fund. Either way, you won’t be overwhelmed by current returns, the result of a rash of rate cuts to stimulate the economy.
“If your daughter really does need the money, she shouldn’t feel bad about current rates of return because that’s the price you pay for liquidity,” explained Marilyn Capelli Dimitroff, a certified financial planner and president of Capelli Financial Services Inc., Bloomfield Hills, Mich. “Also keep in mind that if interest rates level off or start to go up, the money market funds will be more responsive to that than a savings account will.”
In a money market fund, Capelli Dimitroff recommends Vanguard Prime Money Market Fund (VMMXX); minimum investment $3,000; phone 800-871-3879; one-year return 4.17 percent; current yield 1.88 percent. In a short-term bond fund, which fluctuates more but has a higher return, she favors Schwab YieldPlus Investor (SWYPX), minimum investment $1,000; phone 800-435-4000; one-year return 5.33 percent; 30-day yield 4.51 percent.
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Andrew Leckey answers questions Sunday in Business and Tuesday in Your Money. Address inquiries to Andrew Leckey, P.M.B. 184, 369-B Third St., San Rafael, Calif. 94901-3581, or by e-mail at [email protected].