Mutual fund manager pleased with years returns

There’s a reason Michael Willis has a gleam in his eye this week. The Colorado Springs financial-adviserturned-mutual-fund-manager just capped his first year running his Giant 5 funds with a 14.21 percent one-year return for the FIVEX fund and 12.07 percent for the INDEX, according to MarketWatch.com.

Those returns nearly kept pace with the S&P 500’s 14.6 percent return, which the funds use as their benchmark. Since Jan. 1, both funds are ahead of the S&P 500.

“Year-to-date, the five-asset strategy continues to show its resilience in a very turbulent 2007 market by staying ahead of the indexes,” Willis said. “The May-to-May numbers just show us pacing slightly behind the major indexes. Keep in mind this is a total investment system, which is not solely invested in stocks (20 percent bonds and 20 percent REITs).”

Willis said Monday that the no-load funds received $54 million from individual investors since they began trading last May 1.

As the funds grow into their second year, Willis has his sights set on lowering the funds’ 1.36 percent fee to as low as 0.25 percent when it can take advantage of discounts from higher assets.

The funds are the only ones practicing the five-asset style of diversification, Willis said, by dividing the holdings equally among five industry sectors he thinks each portfolio should hold — bonds, stocks, energy, raw materials and real estate.

Although each sector has moved in its own direction, Willis said the funds have maintained their equal weighting, with new investor assets being funneled into categories that have fallen. In its first year, those included energy and raw materials. Willis said real estate and stock market investments were the best performers for the year.

Both funds are fulfilling their goal of providing stable growth and protecting individuals’ portfolios from down markets by being diversified, Willis said, and with the proliferation of exchange-traded funds, he foresees adding more ETFs into his holdings to provide more diversification.

Each of the funds share the same investment philosophy but differ in management. The FIVEX, called the Total Investment System, puts its money in investments led by professional managers. The INDEX, or Total Index System, uses nonmanaged index funds that move in line with the markets as a whole. The INDEX fund also provides fewer capital gains, making them tax efficient.

Having one year behind it gives Giant 5 more ammunition for its Web site. This week the fund debuts a redesigned site, www.giant5.com.

Contact the writer: dan.serra@gazette.com