Mr. Schutz: As the President of Mendon Capital Advisors, I subadvise two mutual funds for Burnham. So I am the portfolio manager of the Burnham Financial Industries Fund and the Burnham Financial Services Fund.
TWST: Would you take us through last year and tell us how you have been coping
with the turmoil in the markets?
Mr. Schutz: The turmoil has created its own challenges, but it has created a lot
of opportunities as well. I was sort of shocked to wake up in early July to find
out that the Industries Fund was the best performing of all domestic equity
funds over the last 12 months. I was surprised because I just keep my head down
and worry about trying not to lose money or trying to make money, but the
volatility has created a lot of opportunity to make money, both short and long,
as well as to benefit from actions taken by government agencies or the Fed. It
has been an interesting time and our investors have been rewarded for staying
with the Fund.
One of the things that I have to my advantage as a portfolio manager is that I
spent 10 years at Chase Manhattan Bank and I traveled a lot of the country and
had seen problems in places like Florida before. I had seen problems in places
like Arizona before. Markets like that go through cycles and that certainly
helped me stay out of trouble as well as recognize opportunities potentially on
the short side. And on top of that, recognizing credit was going to be an issue
out there, beyond the fact that all these securities' prices had blown up, I
took advantage of a very benevolent Fed policy and bought mortgage REITs that
didn't take any credit risk, that invested in nothing but interest rate risk.
Those served the Fund very, very well in both dividends as well as capital
appreciation. Again, opportunity was there to buy things, avoid things, and/or
even short things.
Tickers included in this excerpt: CIM, CMO, JPM, NLY, PBCT, RWT
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