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Hey, couch potato . . . if you love to click that remote and can't get enough entertainment in your life, here's a fund worth getting up for. The Gabelli Global Growth Fund even had your name on it when it first came to market; it was called the Gabelli Global Interactive Couch Potato Fund.
The couch potato that Gabelli Asset Management Inc. was referring to when it introduced the fund in 1994 was no slouch, however. He or she was a leisurely, savvy investor who knew that industries like cable, telecommunications, the media and entertainment offered some hot stock prospects-especially when bought at the right price. It was that kind of investment thinking, after all, that Mario Gabelli, chairman and CEO of Gabelli Asset Management, built his reputation on.
Now, more than five years later, this global growth fund has a five-year average annual total return of 39.25 percent. And it's ranked No. 1 in its category by Lipper Inc. for the three- and five-year periods ending December 31, 1999.
Marc Gabelli, Mario's son, has been the fund's portfolio manager for the past four years. When making his stock picks, the young Gabelli seeks companies with good management and prefers to look at assets rather than stock screens. "I visit with companies and look for good managements in industries that are at the forefront of change and are trading at discounts to their asset values," says Gabelli.
This value-focused approach has kept the fund's money pretty much out of technology stocks. Gabelli says technology is a capital goods story and "capital goods have only a nine-month to one-year life cycle." Therefore, he prefers companies with strong content and solid distribution channels.
Gabelli likes the French company Vivendi, for example, because of what you get when you invest in it. "It's a water utility company and a media and communications company," he explains. "You have a consistency of cash flow because Vivendi provides water, and that's not going to go away in nine months. And you have another part of the business with assets in high-growth areas in telecommunications and media. So when we look at Vivendi, we're buying the AOL of Europe and the Time Warner of Europe for free, and the reason is because the market still looks at Vivendi as a water utility company."
You'll find assets in the Gabelli Global Growth Fund doled out primarily among the telecommunications, broadcasting, publishing, wireless communications and global entertainment industries. With about 90 holdings in the portfolio, the fund stays geographically diversified with roughly half its assets typically invested in U.S. companies. At the end of 1999, 38.8 percent of the fund's assets were in U.S. holdings, 27.8 percent in Europe, 26.1 percent in Japan, 4.1 percent in Canada, 3 percent in the Asia/Pacific region, and 0.2 percent in Latin America.
Interested investors need to be mindful that while diversification among industries-and around the world-can minimize their investment risk, even a top-ranked fund like this comes with no guarantees. Some might even see its past performance as a hindrance, because the best funds don't perform year after year. Plus, it's a value fund, so Gabelli says investors need patience.
In the end, however, it's a portfolio manager's ability to pick good stocks that counts the most. So far, Gabelli's been a winner. But there's no telling what the future might bring.
At A Glance
Fund name: Gabelli Global Growth Fund
Managed by: Gabelli Asset Management
Portfolio manager: Marc Gabelli
Total assets: $447.8 million as of December 31, 1999
Top holdings: Liberty Media Group, Softbank Corp., Sony Corp., Viacom, and Vivendi
Return: 32.94% (since the fund's inception in February 1994)
Maximum Load: no load
Total Expense Ratio: Annual expense ratio is 1.66%, which includes 12b-1 fees of 0.25%.
Minimum Initial Investment: $1,000
Management Fee: 1%
Phone: (800) 422-3554
Figures are as of December 31, 1999.
Dian Vujovich is a nationally syndicated mutual fund columnist and author of 101 Mutual Fund FAQs (Chandler House Press). For free educational mutual fund information, visit her Web site, www.diansfundfreebies.com.