In these salad days for stock market investors, the Mississippi Opportunity Fund was a particularly profitable meal for those who put their money in Mississippi companies last year.
Mississippi`s mutual fund showed a 34.93% return to investors for the calendar year 1997, making it one of the few funds to beat the S&P 500 index last year.
The fund`s performance has gained attention in The Wall Street Journal where it was recently ranked as one of the top 15 performers in capital appreciation. The fund showed a total return of over 55% for the 12 months ending March 28, making it No. 9 among 225 firms.
The Mississippi Opportunity Fund (MOF) is made up of Mississippi-based companies, such as Callon Petroleum and Friede Goldman, and those with significance presence in the state, such as International Paper and Chevron.
It is managed by Vector Money Management, a Jackson investment firm that has garnered some attention of its own since its inception in 1988. Nelson Publications` latest “World`s Best Money Managers” ranks Vector in the Top 20 for fixed income management for performance over a one-year period and in the Top 40 for its fixed income performance over a 10-year period, and it is this Top 40 ranking that makes Vector founder Ashby Foote particularly proud.
“To me it`s gratifying that our ranking for fixed income is for a 10-year period. It wasn`t just one good year,” said Foote, Vector`s chief investment officer. “It`s nice to be ranked in the Top 20 (for one year) but what`s more important is how you`re doing over the long term.”
Foote hopes the same for the three-year-old MOF – that in seven years MOF investors will be satisfied with their investment in Mississippi companies.
So far, the MOF shows an 18.71% return for all three years, including the stellar 1997 return.
A big contributor to last year`s return is the performance of Mississippi banks, said Foote. Highlights were the purchase of Magna Bancorp by Union Planters and the purchase of Deposit Guaranty by First American, a merger that was completed this year.
High voltage performance by stocks like WorldCom, not to mention the current bull market, also helped make 1997 a good year for MOF investors.
To date, the fund has $4.8 million in assets, just shy of Vector`s short-term goal of $5 million for the fund.
Vector has traditionally invested in 40 to 50 of the 170 companies that qualify for the MOF. Currently, the MOF`s largest holding is WorldCom, making the telecom stock the biggest influence on how the fund performs.
What does 1998 hold for Vector clients and MOF investors? So far, so good, but the jury is still out for 1998`s overall performance, said Foote.
Low interest rates and low inflation continue to give the stock market its steam, and if companies continue to produce good earnings, 1998 should be another profitable year for investors, said Foote.
And for Mississippi companies, as well, points out Vector portfolio manager Allen Tye.
“This low interest rate/low inflation environment means capital is more easily available at less cost. Not only can growing companies build out their infrastructure, their client base can afford growth more easily because they`re not paying onerous interest rates,” said Tye. “That`s going to help Mississippi in the long run.”
– By Kelly Russell
MBJ Staff Writer