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Investment Alert
Navellier on the “FundWatch”
list.
Recently, the MedAmerica Retirement and Benefits Committee
met for their quarterly meeting and, in reviewing the investment
funds within the 401(k) Plan, they are concerned with the
performance (or lack thereof) within the Navellier Aggressive
Growth Fund. This fund is only available to the participants
within the MedAmerica 401(k) Plan. Participants in the
EPIC and EPMG 401(k) Plans, as well as the EMA, CEP, and MedAmerica
physicians and employees, also have access to eight remaining
funds that are all performing in the top 25% of their respective
investment styles. A performance table is shown in this newsletter.
The MedAmerica Retirement and Benefits Committee reviews the
performance of all funds quarterly and utilizes the guidelines
shown below to monitor each fund:
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- No change in
Manager: Five years minimum required
- Three year Performance
within style category: Top 25%
- Five year Performance
within style category: Top 25%
- One year Performance
within style category: Top 50%
- Overall Expense
Ratio: under 1%
- Minimum fund
life: Five years
- Deviations from
published style as evidenced by Morningstar’s
grid of nine styles.
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The Committee utilizes two investment consultants and the
Morningstar Mutual Fund database to compile the necessary
statistics for review. If any fund does not meet one of the
above performance categories, they are placed on our “FundWatch”
list. While each fund might be placed on FundWatch for a quarter
or two, this is typically not alarming and no action is taken
by the committee. However, placement on this list for three
consecutive quarters is worrisome.
With the exception of the Navellier Fund, the remainder of
the 401(k) pooled funds meet most or all of the above guidelines
and are not currently under consideration for replacement.
As of the recent quarterly review, the Invesco Real Estate
Fund and the Credit Suisse Capital Appreciation Fund have
been placed on FundWatch, but there is currently no concern
about their overall performance. The Navellier Fund, on the
other hand, has been placed on FundWatch for three consecutive
quarters.
In the past, the Committee might have decided to replace or
modify a fund after three consecutive quarters. With the Navellier
Fund for instance, we modified the fund in 1997 by adding
Furman Selz as a 20% co-manager of the Aggressive Growth Fund.
As soon as we added Furman Selz, Navellier skyrocketed in
value and Furman Selz, while still performing well, never
matched the performance of Navellier. Eventually, we dropped
Furman Selz and reverted to Navellier alone.
Continued
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