When Willie Sutton, the legendary 20th-century bank robber, was asked why he robbed banks, he supposedly quipped, "Because that's where the money is." Today, some smart portfolio managers agree. Ken Mertz, portfolio manager of the Forward/ Emerald Banking & Finance Fund, is one of them.
When the financial services sector is hot, it can sizzle. It includes everything from commercial and community banks to insurance and mutual fund companies, all arms and legs of the brokerage business, real estate investment trusts, and anywhere else money can be harvested. When money is cheap and the economy is responding, as it has been over the past few years, there are many opportunities for fee income in this sector.
Look inside the portfolio of the Forward/Emerald Banking & Finance Fund (HSSAX), and you'll find that over 68 percent of its assets are invested in community banks. Mertz likes them because of their "know your customer" relationships. As of June, the fund's assets were also invested in insurance companies, diversified financial services companies, savings and loans, cash, investment managers, and REITs.
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And this fund has a stellar record: Because of its solid history, it currently boasts four-star ratings from both Morningstar and Standard & Poor's.
Dian Vujovich is an author, syndicated columnist and publisher of fund-investing site www.fundfreebies.com.
Originally published in the September 2005 issue of Entrepreneur Magazine