>BOSTON (Reuters) - Fidelity's Magellan fund, the world's largest mutual fund, suffering its first loss in six years in 2000, posted a 9.29 percent decline despite slashing technology holdings and boosting cash in the fourth quarter.
>Magellan, along with most other stock mutual funds, also saw its asset level chopped in 2000, losing $12.87 billion, or 12.1 percent, mostly in the fourth quarter and due to declines in financial markets.
>The gloomy results were disclosed on Wednesday in Fidelity's monthly mutual fund guide, which showed the decline in assets left Magellan with $93.07 billion in assets at year's end compared with $105.94 billion at the end of 1999.
>The poor returns and loss of assets highlighted the difficult market environment last year, particularly in the fourth quarter as technology stocks plunged and a slowing economy dragged down stock markets and most mutual funds.
>In addition to cutting technology holdings, Magellan manager Robert Stansky boosted cash to 4.2 percent from 3.7 percent. Magellan's cash level remained below the industry norm at the end of 2000.
>The cash level in mutual funds rose to 6.5 percent in November, the highest level since November 1997, according to the Investment Company Institute, a trade group for the industry.
>
>Will also heißen: a) eine Menge Geld ist verdampft (10 - 12 % scheint in etwa der Schnitt bei allen Fonds zu sein) und b) es steht wieder Cash bereit, möglicherweise nicht nur, um rückgegebene Anteil zu honorieren, sondern auch, um neu einzusteigen.
>Mit diesem"Cash Level" wird vermutlich demnächst in Analystenkreise gearbeitet werden.
>L.

A cash level of 4.2 (Magellan) or 6.5 (average) is ridiculous. At a real market crash I expect the cash level to be at 20% or higher. Historically, we have one of the lowest cash levels ever. I through away the newspaper with the numbers, but that's what I can remember seeing the cash level of mutual funds for the last 10 years.
One other reason why the mutual funds were forced to have a little higher cash level is because the fluctuations of contributions increased. In order to pay customers that change the funds they need to have cash reserves. I think overall, the mutual funds are still very bullish.


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>BOSTON (Reuters) - Fidelity's Magellan fund, the world's largest mutual fund, suffering its first loss in six years in 2000, posted a 9.29 percent decline despite slashing technology holdings and boosting cash in the fourth quarter.
>Magellan, along with most other stock mutual funds, also saw its asset level chopped in 2000, losing $12.87 billion, or 12.1 percent, mostly in the fourth quarter and due to declines in financial markets.
>The gloomy results were disclosed on Wednesday in Fidelity's monthly mutual fund guide, which showed the decline in assets left Magellan with $93.07 billion in assets at year's end compared with $105.94 billion at the end of 1999.
>The poor returns and loss of assets highlighted the difficult market environment last year, particularly in the fourth quarter as technology stocks plunged and a slowing economy dragged down stock markets and most mutual funds.
>In addition to cutting technology holdings, Magellan manager Robert Stansky boosted cash to 4.2 percent from 3.7 percent. Magellan's cash level remained below the industry norm at the end of 2000.
>The cash level in mutual funds rose to 6.5 percent in November, the highest level since November 1997, according to the Investment Company Institute, a trade group for the industry.
>
>Will also heißen: a) eine Menge Geld ist verdampft (10 - 12 % scheint in etwa der Schnitt bei allen Fonds zu sein) und b) es steht wieder Cash bereit, möglicherweise nicht nur, um rückgegebene Anteil zu honorieren, sondern auch, um neu einzusteigen.
>Mit diesem"Cash Level" wird vermutlich demnächst in Analystenkreise gearbeitet werden.
>L.

So isses. Ausserdem, man darf nicht vergessen dass viele Investoren einen Teil ihrer mutual funds holdings liquidieren mussten um Steuern zu bezahlen, margin calls zu begleichen, etc.
Das kann zu einem"vicious cycle" fuehren, besonders wenn es sich um mutual funds handelt welche voll investiert waren, also wenig cash reserves hatten. Wenn ein investor also verkaufen will, muss der Fond Aktien liquidieren. Das wiederum kann negative Folgen auf die Preise der Aktien haben welche verkauft werden, besonders wenn es grosse Fonds sind. Fidelity Magellan, ein large cap growth fund, hat sich ueber die letzten paar Monate in einen index fund mutiert. Es ist also kein Wunder dass sein return dem S&P 500 gleich gleicht.
Uebrigens, dieses Jahr werden viele Investoren einen"double whammy" erleben. Nicht nur sehen sie Verluste in ihren Fondswerten, sondern sie werden Steuern zahlen muessen fuer capital gains vom Verkauf der Aktien welche die Fonds abstossen mussten um geforderte cash Zahlungen machen zu koennen.
Ja, 2000 war kein gutes Jahr fuer Investoren.
mfg. P.



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