Specialized Funds—Which One Looks Best?

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The types of mutual funds most investors deal with are, of course, the load type.

There is another type which is no-load in nature. It is marked by absence of the load charge, or sales commission charged by most open-end investment companies.

Ranging from six to nine percent, this charge is included in the offering price of mutual fund shares. About 10 percent of mutual funds are the no-load type, with Energy Fund Inc. attracting the most recent attention.

While most no-load funds are of the balanced type, Energy Fund specializes in industries operating in the energy fields. It was founded by a group of private investors headed by Mr. Ralph E. Samuel, senior partner of the firm of Ralph E. Samuel & Co., who believe that energy is an integral part of all economic and technical progress.

Energy Fund has stressed from the very beginning the use of scientific consultants to ferret out significant developments in the various fields of applied science. The management relies heavily on outside experts to keep it up-to-date on broad industry trends.

Its brain trust includes such people as Dr. Albert M. Stone of the Applied Physics Laboratory at Johns Hopkins, Dr. Mirek Stevenson of Samson Associates, a consultant in physics to IBM, etc. It calls on Arthur D. Little, Inc., for the evaluation of new products and processes, while all investment ideas are cleared through the research staff of Goodbody k Co.

"With capital gains its prime target," said Financial World, "the fund's portfolio is weighted heavily with growth stocks in the various fields relating to energy. Some balance is provided, however, by large holdings of utility, oil and gas issues, which have defensive characteristics as well as growth possibilities. The star performers in the Energy Fund have been stocks from fast-expanding areas of high technology—electronic data processing, microwave, infrared, cryogenics, fuel cells, semiconductors and similar glamour industries."

Another recently organized investment company is the Oppenheimer Fund. It is designed to operate as freely as any sophisticated individual investor. It can sell short, borrow money for leverage, or place 25 percent of its assets in one security.

The emergence of such special-type funds as Oppenheimer illustrates an interesting trend among newcomers to the industry. The traditional emphasis on well-rounded portfolios for small and medium-seized investors, with primary emphasis on safety, is shifting to a more aggressive search for capital gains.

This trend away from the conventional funds not only reflects the effort to attract customers in the higher brackets, but also points up the mounting competition in the industry.

For example, Revere Fund slants itself toward the securities of smaller growth companies not tied too closely with the over-all economy, placing heavy emphasis on companies producing consumer specialties. Samson Convertible Securities and Capital Fund invest chiefly in convertible debentures. Eurofund, Inc., specializes in European securities.

Deserving special mention are the so-called stock-swap funds which offer their shares in a tax-free exchange for individual holdings. The swap fund idea was conceived in 1960 to help investors who are locked into large capital gains.

The swap plan works like this: in trading, the fund accepts what it rates as choice issues. It then puts them in escrow while assembling a complete portfolio. The investor can look over the lineup before making his decision. If he doesn't like the stocks chosen or the diversification he is free to refuse them. Acceptable stocks are listed in a prospectus, and the choice is usually very wide.

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