From J.J.H.: “Do you have any advice for someone who followed your suggestion awhile ago (from The Only Investment Guide You’ll Ever Need, Revised and Updated) and purchased some shares in the Mutual Series Fund family (now that Heine Securities Corporation has been joined to Franklin Resources)? Although the individuals involved in the management of these funds have promised to remain with them for several years, can I expect to see any radical changes now that ultimate oversight is provided by Franklin Templeton? Is there an historical precedent I should be aware of when this type of takeover happens? Are there cautions you’d suggest?”
Well, I haven’t sold mine.
When The Only Investment Guide You’ll Ever Need was first published in 1978, it recommended only a handful of funds, including Mutual Shares (which in the years to come was joined by some Mutual brothers and sisters). It was only recently dropped from the “revised and updated” 1996 version in a printing subsequent to the one you apparently bought, because for new customers (only), the Mutual Series funds, recently acquired by the Franklin family of funds, as you noted, will charge a sales commission (or “load”) — and I only recommend no-load funds.
But for those of us lucky enough already to have shares in any of the Mutual Series funds, any future purchases will be grandfathered as no-load, so that’s not an issue for you or me.
I actually bought my first shares in Mutual Shares in 1976 or 1977 when my employer, New York Magazine, was acquired, and I needed a place to rollover my gargantuan retirement account. (It was around $5,500, if memory serves.) I put it into an IRA with Mutual Shares, and today, bless its little greedy heart, it’s grown to $125,000 or so. Yes, it was helped along by five or ten voluntary, non-deductible $2,000 contributions along the way (non-deductible because I was also contributing to a self-directed Keogh Plan). But I’m still more than pleased with the performance.
Interestingly, the genius behind Mutual Shares, Max Heine, died many years ago. But the young fellow he trained, Michael Price, did every bit as well as the master. Now Price is easing his way out (having just picked up $550 million in his sale to Franklin, with the chance for a couple hundred million more if things go well), but he has a cadre of key people he’s trained.
Will Mutual Shares do as well in the future, relative to other funds, as it has done in the past? Without Michael, maybe not. But I’d be in no great rush to sell on the basis of the merger, if I were you. And if I did sell, I’d retain a token position in the fund because, as I understand it, that will allow you to reinvest in any of these funds in the future without having to pay a load.
PS — For more, you might want to read Fortune’s excellent take on Michael Price and his lieutenants.