Faith in Mutual Funds

How did the mutual funds fare in the stock market's sharp first-quarter decline? Last week, from Mutual Fund Expert Arthur Weisenberger & Co. came the answer. For the first three months of 1960, the average decline in per share net asset value of mutual funds with unrestricted investment policies was 6%. Funds that specialize in growth stocks fared a little better, declining an average of 5%, while funds that balance their portfolios among common and preferred stocks and bonds were off only 2%. Thus by the Weisenberger tabulation, which includes dividends and reinvested capital, the funds' performances were better than the Dow-Jones industrials', which declined 9%.

Despite the market slide, small investors continued to pour more money into mutual funds, investing for long-term gains. Sales of mutual-fund shares in the first quarter rose to a new high of $619 million, up 3 1/3% from a year earlier. Increased redemptions were more than matched by new sales. At the end of the first quarter, the 156 open-end investment company members of the National Association of Investment Companies had total assets of $15.3 billion. Their holdings of common and preferred stocks listed on the New York Stock Exchange represent almost 4% of the total value of the Big Board's stocks.

The funds were far from agreement in how to view the market. After a survey of first-quarter portfolio changes by 42 leading investment companies. Wall Street's E. F. Hutton & Co. reported that some built up cash and bond holdings, while an equal number took the opposite position, bought heavily in common stocks. There was big buying in American Telephone & Telegraph, International Business Machines, Arkansas Louisiana Gas, Tampa Electric, and Babcock & Wilcox. Selling was heavy in such drug stocks as Chas, Pfizer, Merck, and Parke, Davis, following the unfavorable publicity of the Kefauver hearings.

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