Q How likely will my shares of Visa Inc. continue to gain in value?
P.G., via the Internet
A This global powerhouse is benefiting as consumers start shopping again. Its brand name is on more than 60 percent of the world’s cards, though that share is being eroded by American Express.
Because it makes its money from the fees it charges thousands of financial institutions, it isn’t hurt by rising credit delinquencies. It also benefits from the rapid growth of debit cards, which are used more often than credit cards for basics such as groceries and gasoline.
The company’s fiscal third-quarter profit grew 33 percent as consumers spent more and more credit card payments were made.
Visa is also paying $2 billion in cash to buy CyberSource Corp., a provider of electronic-payment security services to online merchants, which is expected increase online use of Visa credit, debit and prepaid cards.
Shares of Visa (V) recently were down more than 15 percent for the year, after last year’s 68 percent gain. The company has an outstanding balance sheet, growing cash flows and little debt.
Earnings are expected to rise 33 percent in the fiscal year ending in September and increase 21 percent the following fiscal year.
Q What is your investment opinion of Vanguard Growth Equity?
C.B., via the Internet
A Easy does it: In an attempt to calm this fund’s volatility, it has undergone considerable change with management now split between two advisers.
Half of the portfolio is run by Mick Brewis of Baillie Gifford American, in charge since 2008. Kathleen McCarragher of Jennison Associates took control of the other half last year.
They came on board as Vanguard phased out Turner Investment Partners, which had an aggressive, momentum-chasing style and traded frequently. Brewis and McCarragher have solid long-term records elsewhere, and this fund features low expenses.
The $651 million Vanguard Growth Equity Fund (VGEQX) is up 20 percent in the last 12 months.
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“We recommend Vanguard Growth Equity Fund because the new managers have the potential to lower the volatility of the fund so it will probably be easier to own going forward,” said Sonya Morris, analyst with Morningstar Inc. “However, we were critical of the timing of the management change, as Vanguard fired Turner right at the bottom when market conditions subsequently favored its approach.
“It’s been a short time since they’ve taken charge, but it has held its own, performing on a par with its category. But it’s too soon to say much more than that.”
Baillie Gifford prefers leading firms with strong balance sheets and the ability to increase earnings faster than the overall market. Jennison seeks firms whose revenue is growing faster than the Standard & Poor’s 500 and whose franchises are defensible.
Health care and hardware are the fund’s two largest concentrations, each at about 17 percent of portfolio.
This “no-load” (no sales charge) fund requires a $10,000 minimum initial investment and has an annual expense ratio of 0.51 percent.
Q What’s the easiest way to designate beneficiaries for my securities?
E.B., via the Internet
A “Transfer on death” registration allows you to pass stocks, bonds, mutual fund shares or brokerage accounts directly to another person or entity without having to go through probate. You can specify the percentage of assets each will receive, and you maintain control of the assets during your lifetime.
“While most individual retirement accounts ask you upfront to name a beneficiary, non-IRA brokerage accounts usually don’t,” Mike Busch, certified financial planner with Vogel Financial Advisors.
So you must request that this be done with a non-IRA account, he said. Transfer-on-death registration involves beneficiary paperwork not usually presented to you automatically when you open a regular account.
Andrew Leckey answers questions only through the column. E-mail him at [email protected].