Vista Chief Talks Mutual Fund Tactics
STAYING No. 1 is not just a minor goal for mutual fund top gun W. Christopher Maxwell.
Mr. Maxwell is president and chief executive officer of the Vista Capital Management Group, which oversees the Vista Family of Funds, based here in New York. For the four years since its inception in September 1987, Vista's equity growth-and-income fund has been the top-ranked mutual fund in that category, according to Lipper Analytical Services, which ranks most United States mutual funds. Vista also has the top-ranked equity growth fund for that period.
Nor is that all; four of Vista's five stock and bond funds ranked in the top 10 in their investment categories for the three-year period ending last December, according to Lipper. Clearly, Vista has been doing something right.
Recently, Vista has adopted a somewhat cautious stance about the stock market.
"We've moved to a slightly larger cash position than usual," says Mark Tincher, portfolio manager for Vista's equity funds. Thus, in the Vista Growth and Income Fund, about 15 percent of assets are now in cash, 5 to 7 percent in convertible securities, and about 78 to 80 percent in equities, he says.
Maxwell and Mr. Tincher both say that, given the strong upward thrust in the stock market in recent months, a downward correction is possible, although likely one under 10 percent.
Maxwell says he's not going to become overly concerned about "market timing" - that is, undertaking spot strategies to avert the negative impact of any downturn. And, he says, he doesn't really need to. The very concept of a "family" of mutual funds, with equity, bond, and money market capabilities, allows investors the opportunity to make a quick phone call to shift assets back and forth between funds as market conditions change.
The key to Vista's continuing success, Maxwell says, is its special investing philosophy: Vista attempts to seek out companies with strong underlying value, but that also have some type of unique growth momentum going for them. For that purpose, Vista keeps a select roster of about 2,000 companies on its screening monitors. Then that list is continually winnowed down to a smaller universe of about 400 companies. It is from this shorter list that portfolio selections tend to be made.
Vista's growth/income fund is currently shifting its focus away from cyclical and industrial stocks to consumer nondurable and health-care firms, says Tincher. He likes Circuit City, K Mart, the Gap, and Phillip Morris, among other companies. In the case of the growth fund, he prefers medium-sized companies with a capitalization of between $500 million and $1 billion, rather than smaller-cap firms valued at under $500 million.
Mutual funds have had a tremendous run-up in investment monies of late. Maxwell predicts the trend will continue, especially since many individuals worry about whether Social Security and corporate pensions will be adequate when they retire.
The Vista funds are made available through the Chase Manhattan Bank. Although Vista Broker-Dealer Services Inc. - the distributor of the funds - is not affiliated with Chase, the Chase Manhattan Private Bank, a unit of the bank, manages the portfolios of the various Vista funds.
Vista funds are mainly sold in the Northeast, where Chase has a strong regional banking presence. Maxwell envisions eventually making the funds readily available in other parts of the US. Chase has a sizable banking presence in California and Florida, for example. In addition, Maxwell says he would not rule out acquisitions of funds managed by other companies.
Vista has 10 funds in its mutual fund family, with total assets of $1.4 billion. The flagship is the Vista Growth and Income Fund, with assets of $65 million, which has racked up an average annual total return of 34 percent. For the three-year period ending in December, the fund ranked first out of 153 growth/income funds and first of 735 equity funds Lipper monitors. The Vista Capital Growth Fund was ranked first of 201 growth funds.