Of mutual interest

NEW YORK -- A few years ago, mutual fund companies were bragging about their portfolio managers. Some of the managers, most notably Fidelity Magellan's Peter Lynch, were showcased on TV shows and in ads to attract new shareholders.

Now, fewer companies are putting managers in the spotlight, partly because the bear market has given them less to show off. At the same time, a growing number of fund companies are moving away from individual managers toward management teams.

"The team approach provides the best coverage for investors," said Connie Kain, a spokeswoman for VanKampen Funds, which officially adopted team management in August 2001. "That way, if someone leaves the firm, we still have a strong structure in place to preserve the shareholder's interests."

It also protects the fund company's interests. Cultivating shareholder loyalty to a particular fund company rather than a particular fund manager is a major reason for the shift -- investors attracted to a fund family rather than one manager are likely to buy more of the company's funds.

Not only does a team structure emphasize the brand of fund, it also makes it impossible for a single person to take credit for any gains.

"It's a way for fund companies to not to put all their eggs in one basket," said Whitney Dow, an analyst at Financial Research Corp. "There's always a concern among fund companies that if a particular portfolio is closely identified with a portfolio manager and the portfolio manager happens to leave, there could be a mass exodus from the fund."

Dow said the increasing complexity of some funds also made it difficult for one person to effectively manage, so spreading the responsibility among a group of people makes more sense. There is also belief that a team structure might limit salaries -- and in turn, keep expenses down -- since there would be no single "superstar" to pay.

But some shareholder advocates are concerned about the trend, saying fund owners will lose access to a key piece of information -- although a mutual fund is required to identify a portfolio manager, there is no similar Securities and Exchange mandate for a fund led by a team.

"In a six to 12 month period you could have 100 percent turnover in your so-called team, and you'd never have to notify shareholders -- even though all the people responsible for the performance of the fund that you're advertising have left," said Mercer Bullard, founder of Fund Democracy, a shareholders' advocacy group.

Indeed, many fund families, including Fidelity, Janus and others, believe that portfolio managers are still the best way to manage funds. One of the reasons is the issue of accountability. John Schreiber, portfolio manager of the Janus 2 Fund, says he knows, as do shareholders, that he is ultimately responsible for the fund's performance.