"A slow-growth environment is where our results shine," he says.
Time will tell. Founded in 1995 by Yeager, Wood & Marshall of New York-an investment firm whose roots go back to 1944-the U.S. Global Leaders Growth Fund has only $80 million in assets and a short track record.
So far, however, the fund's results give reason to take notice. As of March 31, the fund has gained an average of 17.56% a year. It was one of the top-performing large-cap growth funds in the nation in 1997, with a return of 40.5%, despite having few investments in technology. It followed that performance with a 32% return in 1998.
When compared with other large-cap growth funds, its worst year was 1999, when its 7.9% return placed it in the 99th percentile, due largely to a small tech weighting, according to Morningstar. "That's not surprising, because this kind of fund is not going to excel when momentum stocks are in favor," says Morningstar equity fund analyst Kelli Stebel.
Pegging this fund is difficult. Although categorized as a large-cap growth fund, growth expectations are only one of several key criteria used to screen stock selections. Even though Yeager's conservative principles often are closely aligned with those of value investors, his stock selections frequently have high price-to-earnings ratios when compared with the S&P 500. And while the fund's holdings generally are all S&P 500 companies, the fund, with only 19 holdings currently, doesn't present itself as an index of any sort.
That's why, Stebel says, the fund has been a tough sell-especially during the go-go technology-driven 1990s. "This investment could be considered a little stodgy," she says. "What story would you rather hear on the nightly news: a company that makes batteries or some Internet software company that is revolutionizing the way people do business?"
Yeager acknowledges the fuzzy nature of the fund, saying, "It's not something you can explain in sound bites."
Yeager, in fact, expresses disgust at the hour-by-hour mentality of today's market. He keeps his office television tuned to CNBC throughout the business day, but he leaves the sound off. "I've always had a long-term focus," he says.
He started in the investment industry in the public relations office of the Federal Reserve. A few years later, in 1960, he went into private practice in New York City as an analyst and account manager for Franklin Cole & Co., which was founded in 1944. After a couple of reorganizations, that firm evolved into Yeager, Wood & Marshall, whose offices are located in the heart of midtown Manhattan.
Yeager, who manages the U.S. Global Leaders Growth Fund with George P. Fraise, says the fund mirrors the separately managed accounts the firm has handled for its high-net-worth clients for decades. Since 1989, clients' blue-chip portfolios have gained an average of 19.2% per year, compared with 16.7% for the S&P 500 Index. Early on, he says, the firm began to realize that "the common denominator of 80% of our mistakes was the absence of a recurring revenue stream."