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Fund summit takes on issues
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May 3, 1999: 12:27 p.m. ET
Annual Morningstar conference will look at market, the future of mutual funds
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NEW YORK (CNNfn) - The Internet bubble. Junk bond funds. Brazilian devaluation. Investors have more choices than ever today, and Wall Street has never been a more complicated landscape to navigate.
A group of top mutual-fund managers and investment advisors will meet in Chicago this week to talk about the puzzles they are trying to figure out while they take care of your nest egg.
About 1,000 managers and financial planners will attend a conference Tuesday and Wednesday sponsored by fund-researcher Morningstar for discussions on the path of the U.S. market, the outlook for Internet stocks and even the future of the fund business itself.
"There is so much information that now the task is to find the handful of variables that make the difference," said Margaret Patel, manager of the Third Avenue High Yield Fund and one of the featured speakers.
The conference, in its 11th year, attracts many of the biggest names in the industry and generates a buzz on different issues as professionals exchange ideas, said John Rekenthaler, director of research at Morningstar.
Last year, William Miller, president of Legg Mason Fund Adviser Inc., helped ignite an interesting debate about America Online (AOL), Rekenthaler recalled. Another manager said he thought AOL was overvalued and Miller gave a lengthy explanation why he disagreed.
"That was a touchstone debate," Rekenthaler said. "AOL had been 'the' stock of the last 18 months, a stock symbolic of the Internet becoming mainstream."
A few years back, Vanguard Group Chairman John Bogle tested out some material he later included in his new book, "Common Sense on Mutual Funds - New Imperatives for the Intelligent Investor," Rekenthaler said.
Garrett Van Wagoner appeared in 1996 about six months after he launched his own fleet of funds amid high expectations. He had attracted about $1 billion in assets in five months, setting a new record in the industry, and his session was packed.
At another conference, Tom Marsico was the "buzz" because he had just left the Janus Twenty Fund in 1997 to form Marsico Capital Management.
Brandywine Funds' Foster Friess also did some explaining at a conference after he raised his cash level to nearly 80 percent in 1998, a move that raised a lot of eyebrows on Wall Street, Rekenthaler said.
While Rekenthaler said it is hard to predict what will be hot, he said one theme is likely to be centered on the handful of large cap stocks that have driven the market.
"This is an ongoing debate among portfolio managers," he said. On one side, managers argue that in a new era where technology is so important, a handful of stocks naturally would lead the way. On the other side of the debate, managers argue we are at the end of the bull market.
A second theme is likely to be the path of the fund industry itself, Rekenthaler said. As more people invest through electronic trading, they may be asking themselves why they should rely on a manager when they can get good returns on their own.
"Funds are clearly the dominant way to invest," he said. "But I don't think they have the power they had five years ago … funds have lost some of their luster. Investors tell their financial planners, 'Why don't we invest in stocks rather than funds.' "
Other topics are likely to be interest rates and Internet stocks.
Among the other speakers are Ronald Baron, chairman of Baron Funds; Charles Morris, manager of T. Rowe Price's Science and Technology Fund; and Beth Terrana, manager of the Fidelity Fund and Fidelity Destiny II Fund.
"I want to hear what is on advisors' minds," said Patel of the Third Avenue High Yield Fund. "I want to know what they're thinking about." 
-- by staff writer Martine Costello
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