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Century Capital Management
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SEPARATING FUND PERFORMANCE FROM DISTRIBUTION AND STYLE
BY MANAGING DIRECTORS JOHN CASEY AND LANNY THORNDIKE
With the huge disparity that now exists between the performance figures of a
handful of large-cap "nifty" stocks versus most actively managed funds, clients
are asking more pointed questions of their advisors and mutual fund managers.
Though independent advisors have been a catalyst for change in how clients view
this industry, they also are an easier target for criticism. Relatively
speaking, they are the newest members in an old club. They are garnering a
larger percentage of industry revenues, are envied for their client
relationships, and are an "independent" element standing in the way of an
orderly consolidation by industry giants. Put simply, successful advisors will
need to dig deeper to add value in today's volatile markets.
As managers of a 71 year-old no-load mutual fund, it is safe to say that our
fund has weathered a number of bull markets, several recessions, one Great
Depression and the "nifty fifty" of 1972. Though perhaps it is unusual that this
essay is being submitted from a source which in recent years has done most of
its business through direct relationships, we believe businesses like yours and
ours stand to benefit mutually in times like these. To us, the best defense
remains a good offense, and intelligent advice still is the basis of a sound
business model regardless of the environment.
NAVIGATING THE TIDE
The demand for quality investment advice and performance has increased
dramatically over the last several years. The number of investment alternatives
has expanded with the market itself, making selection decisions more challenging
and such expertise more valuable. However, there is a systematic breakdown of
"content" that results when the market's need to standardize investment product
language limits investment managers' ability to defferentiate their funds
within/across broad categories. The opportunity is abundant for advisors to add
value for clients through their own research efforts.
PERFORMANCE AND DISTRIBUTION
In today's investment world, good performance and good distribution are
complementary but rarely done well within the same fund family. The advantage
for the independent advisor lies in his or her unique ability to tailor the
supply of "ingredient" funds into an appropriate "recipe" to match clients'
risk/return demands.
QUESTION WHAT YOU OWN
Compare investment selections of mutual funds versus stated "objectives."
Valuation parameters should be key benchmarks in most buy/sell decisions. Ask
where the emphasis is placed in a growth and income fund. What is an appropriate
price for growth? Does growth require sector bets? Look for consistency of
patterns within the fund's portfolio. Portfolio companies can be a window into
fund managers' methodology and a partial report card on their ability to help
you add value in the client relationship.
STICK TO A CONSISTENT STRATEGY
Century Shares Trust has been managed to a growth and income mandate since
1928, making it one of the ten oldest mutual funds in existence today. Our
expertise in insurance, banking and related financial services has branded us as
a "sector fund" on many radar screens. Nevertheless, our fund has outperformed
the Lipper G&I Index over a multi-year investment horizon. We highlight this for
two reasons: (1) we believe the value of industry expertise and relationships
cannot be understated when it comes to delivering sustainable "growth of income"
over the long-term, and (2) there are similar funds out there, under the radar
screen of most trackers but capable of delivering growth at attractive values.
Century Shares Trust (CENSX) is a no-load open-end mutual fund managed by
Boston-based Century Capital Management, Inc. ("CCM"). CCM and its affiliates
have approximately $1.0 billion of capital under management in the form of both
CENSX and private venture partnerships, which invest in insurance, banking,
healthcare and a number of related "risk management" industries. With the recent
addition of two Managing Directors on the mutual fund side, we plan to expand
our product offerings and explore opportunities to add value to relationships
through portfolio research publications and direct access to our portfolio
managers. Performance data for CENSX represents past performance. Investment
returns and the principal value of an investment will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than their original
cost. For more info about CENSX, including charges and expenses, obtain the
prospectus by calling 800-321-1928. Read it carefully before you invest.
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COMPOUNDED TOTAL RETURN AVERAGE ANNUAL RETURN
CENSX LIPPER G&I CENSX LIPPER G&I
1 year (to 12/31/98) 7.0% 13.6% 7.0% 13.6%
3 year 88.2% 73.9% 23.5% 20.3%
5 year 144.6% 127.1% 19.6% 17.8%
10 year 431.2% 324.1% 18.2% 15.6%
23 year 3053.9% 7437.0% 16.2% 15.1%
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Financial Planning/Fee-Based Guide 1999 Sponsored Advertising Supplement
