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An Elite Club

An Elite Club. Ashley Ewing Brit Hafner Bart Hostetler Zach Huffman. The Triple Digit Club. At the end of March 2000, 9% of stock funds around at the time (275 funds) posted gains of 100% or more in the previous 12 months. Of those, 24 funds returned more than 200%

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An Elite Club

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  1. An Elite Club Ashley Ewing Brit Hafner Bart Hostetler Zach Huffman

  2. The Triple Digit Club • At the end of March 2000, 9% of stock funds around at the time (275 funds) posted gains of 100% or more in the previous 12 months. • Of those, 24 funds returned more than 200% • And one, PBHG, gained 533%

  3. Where are they now? • 97 of the funds no longer exist as investors in 2000 knew them • 44 had their track records swept under the rug • 22 were liquidated • Morningstar was unable to determine the fate of another 31; they had dropped out of its database.

  4. I’m a survivor! • Of 179 survivors tracked, only 37 topped the market's average return of 1.7% per year in the seven years since March 10, 2000 • Another half-dozen eked out slimmer positive results. • For nearly 1/3 of these funds, an investor who bought on the day the Nasdaq Composite Index peaked would have averaged double-digit annual losses since.

  5. Losses • Losses were so severe that 34 funds lost a lot more than their triple digit gains. • For example, someone who purchased Van Wagoner Emerging Growth in March 1999 would be down 63% today.

  6. Not everyone’s a loser • Turner Emerging Growth, which posted a 194.6% trailing 12-month return in March 2000, is up an average 9.6% a year over the past seven years.

  7. PBHG - What went wrong? • Fund managers paid little attention to risk control, but instead they threw money at stocks trading at incredible share-price-to-earnings multiples, and they concentrated bets in narrow parts of the market • Analysts predicted stock prices to rise throughout the rest of the year; however they went down • Lost 28% per year on average (market lost 11.8% per year)

  8. PBHG – What went wrong? • $459 million in assets in March 2000 dwindled to $28 million in March 2003 • Invested 100% of assets in single sector • From a lack of diversification, PBHG was not able to react to market changes

  9. Merger • PBHG merged into Old Mutual Emerging Growth Fund, thus wiping out the history of PBHG

  10. The Departed • 24 funds shut down and the money was returned to investors • The mutual funds that loaded up on Tech-Stocks left little margin for error • When the market collapsed, these funds were hit the hardest

  11. Success Stories • Al Frank Fund has the best annualized results for a US stock fund, up an average of 11.4% a year • The fund had $20 million under management in 2000 is now worth $270 million today • Since 1999, the fund is up 345%

  12. QUESTIONS???

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