Wall Street Journal

Funds vs. Fund Stocks

In recent years, the stocks of several mutual-fund firms have outperformed the best stock funds they manage.
Fund company
The company's stock return
Annualized 5-yr.
fund return*
Year-to-date
Five years
Alliance Capital Mgmt
35.85%
31.78%
28.59%
Eaton Vance
30.57   
36.07   
19.80   
Franklin Resources
23.77   
36.91   
28.59   
John Nuveen
4.24   
3.79   
7.08   
Pimco Advisors
2.89   
22.72   
23.04   
T. Rowe Price Assocs
20.36   
49.51   
26.48   
Nvest
19.89   
22.69   
23.97   
S&P 500 Index
15.08   
23.23   
--      

Note: Returns include reinvested dividends, and are through April 30, 1998.
*Company's best-performing fund
Source: Morningstar

Questions:

  1. This article compares the returns on the mutual fund company's stock with the performance of the best fund run by the company. What implications, if any, would you draw from this comparison? Explain.
  2. Does the fact that these returns were compared over a 5-year period when the stock market did much better than expected make any difference in this comparison?