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THOSE INCREDIBLE SHRINKING MONEY FUND YIELDS

Oct. 01, 1991
Oct. 01, 1991

Table of Contents
Oct. 1, 1991

Cover
MONEY FORECAST
MONEY UPDATE
Departments
COVER STORY

THOSE INCREDIBLE SHRINKING MONEY FUND YIELDS

The seven-day yields on money-market funds sank in August to 5.4%,
their lowest level since early 1987. A handful continue to pay more
than 6% (see our ranking on page 66), but even that modest
achievement often requires some gimmickry. For example:
-- Harbor Money Market leads our monthly ranking with a seven-day
annualized yield of 6.4%, but there's less there than meets the eye.
Unlike the vast majority of money funds, Harbor actively trades its
portfolio to boost its return with capital gains. (Most other funds
simply hold their securities to maturity, collecting income only and
eschewing potential trading profits.) An injection of such profits
during our seven-day measuring period in late August accounted for
the fund's top ranking. The next week the yield, lacking any lift
from capital gains, had fallen to a pedestrian 5.2%.
-- Behind almost all of our other recent top yielders was a fund
sponsor absorbing at least part of the fund's operating cost. But
investors in one of the most successful practitioners of this
technique, the massive $9.2 billion Dreyfus Worldwide Dollar, are
coming to the end of the free ride. Since July, Dreyfus has been
phasing in the first half of the 0.5% management fee it had waived
completely since the fund's inception in early 1989. Dreyfus vows not
to impose any more fees before next April. Still, the added expense
raises the fund's total costs to about 0.38% of assets -- which may
lower the yield enough to push the fund off our future monthly
rankings. If you invested in Worldwide for its extra yield, it may be
time to look elsewhere.

This is an article from the Oct. 1, 1991 issue

CHART: NOT AVAILABLE
CREDIT: Source: Lipper Analytical Services
CAPTION: GROWTH FUNDS STAGE THEIR OWN AUGUST COUP TO LEAD OUR
DIVERSIFIED FUNDS
The defeat of the hard-line Communist coup in Moscow carried U.S.
market indexes to record levels in August -- and powered top
growth-oriented funds further still. All but two of our 30 funds
bettered the S&P 500's 2.2% return for the month, led by Hartwell
Emerging Growth fund, which spurted 9.9%. Five- year winner for the
second consecutive month: Twentieth Century Ultra, up 169.2%.

CHART: NOT AVAILABLE
CREDIT: Source: Lipper Analytical Services
CAPTION: GROWTH -- THE MORE AGGRESSIVE THE BETTER -- TOPS OUR
SELECTED CATEGORIES
Helped by the continued surge in health care and cyclical stocks,
growth and maximum capital gains funds both gained 3.2%, best among
the four fund types in our August selected categories. For the 12
months to Sept. 1, white-hot CGM Capital Development fund returned
80.8%.

CHART: NOT AVAILABLE
CREDIT: Source: Lipper Analytical Services
CAPTION: RISK-TAKERS REIGN AMONG TOP VARIABLE-ANNUITY ACCOUNTS
Aggressive stock and bond accounts dominated our 12-month rankings
of variable annuities. Equitable's Equi-Vest Aggressive Stock's 37.8%
gain was the winner in its group, while Hartford Putnam Capital
Manager-High Yield took bond fund honors, returning 15.1%.

CHART: NOT AVAILABLE
CREDIT: Source: Lipper Analytical Services
CAPTION: WHILE INTEREST RATES TUMBLE, HIGH-QUALITY BOND FUNDS LEAP
AHEAD
As long-term rates declined 0.3 percentage points in August, the
funds most sensitive to rate fluctuations -- U.S. Government and
high-grade corporate funds -- posted the biggest gains, both rising
2.4%. Junk funds, the top category for the past several months,
scored a 2% gain on signs that the recession was ending. Top 12-month
performer: the extraordinarily rate- sensitive Benham Target-2015, up
29.5%.

CHART: NOT AVAILABLE
CREDIT: Sources: Lipper Analytical Services and IBC/Donohue's
Money Fund Report
CAPTION: THE MONEY 20: SUPERIOR FUNDS FOR THE LONG HAUL
All but one of our 20 elite funds finished August in the black,
with the average selection up 2%. The runaway equity winner, Janus
Twenty, jumped 6.1% on large holdings in surging stocks like
Telefonos de Mexico and Duracell.

CHART: NOT AVAILABLE
CREDIT: Sources: Lipper Analytical Services and IBC/Donohue's
Money Fund Report
CAPTION: THE MONTHS'S BEST-PERFORMING MONEY-MARKET FUNDS