EdVest loses Strong accounts in January
By PAUL GORES [email protected], Journal Sentinel
Friday, February 13, 2004
Investors in Wisconsin’s EdVest college savings program closed 3,166 Strong funds accounts in January, while the number of accounts using non-Strong portfolios increased by 4,737.
Assets in Strong’s EdVest portfolios dropped $11.6 million in the month, state Treasurer Jack Voight said Thursday. Portfolios of other fund management companies, which were added in December in response to concerns about regulatory probes of Strong, gained $30.7 million in assets in January.
The new portfolio managers are Vanguard, Legg Mason and Robert W. Baird & Co. The Vanguard Balanced Fund saw the biggest number of new accounts in January — 1,949 — for a total of 5,870 since the fund became available to EdVest investors.
Although Strong portfolios lost accounts and saw assets shrink, the amount remaining in Strong funds still far outpaced EdVest assets in other portfolios, $361 million to $106 million.
Overall, the EdVest program had a net gain of 1,571 accounts and $19.1 million in assets in January. The college savings program’s other investment tool, the $661.5 million Tomorrow’s Scholar, had a net gain of $10.3 million in assets, even though it lost 516 accounts.
Voight said a number of factors, including allegations by New York Attorney General Eliot Spitzer of improper trading involving Strong funds, likely contributed to decisions by some investors to take money out of EdVest’s Strong portfolios last month.
No charges have been filed against founder Richard Strong or the firm. The company declined to comment Thursday on the EdVest figures.
About 37% of the $11.6 million in assets that departed from Strong portfolios went to payments for college expenses, while 33% went to transfers to other funds within EdVest and 30% was moved to tax-advantaged state college savings plans elsewhere.
The $11.6 million decrease in assets in Strong portfolios is a tiny fraction of Strong’s overall assets. Strong Capital Management Inc. managed a total of $37 billion as of Jan. 31, including the $361 million in the EdVest program.
Still, mutual fund assets managed by the Menomonee Falls company have decreased by nearly $5.5 billion since Sept. 3, when Spitzer implicated the firm in allowing a hedge fund to make improper trades in its funds.
