Like so many other financial-services companies, Transamerica - best known for its pyramid-shaped building that graces San Francisco's skyline - has entered the booming mutual-fund business. But unlike the often stodgy funds marketed by many other insurance companies, Transamerica Premier Equity (1-800-892-7587) is a sizzler.
Premier Equity is the top-performing long-term-growth fund over the past 12 months. It finished in the top 10 percent among its peers in its first full year, 1996. While the fund levies annual expenses of 1.5 percent, it has no sales charge.Ordinarily, you might wait for evidence that Premier Equity, which has assets of just $110 million, can put up good, long-term numbers. But the fund is a clone of a $900 million Transamerica retirement account. Premier Equity's manager, Glen Bickerstaff, 41, has also managed the retirement account since 1987.
Over the past 10 years, the retirement account has returned an annualized 28.8 percent - an all-but-impossible 10 percentage points per year more than Standard & Poor's 500-stock index. That's better than any mutual fund has done during the past 10 years.
Moreover, the retirement account from which Premier Equity was cloned has shown consistency in its performance. Except for 1989, it has beaten the S&P 500 every year for a decade. The fund is one-third more volatile than the average long-term-growth fund and nearly two-thirds more volatile than the S&P 500. But, Bickerstaff says, "A great deal of our volatility has been on the upside."
Bickerstaff, who works closely with the firm's eight other analysts and portfolio managers, looks for businesses with a competitive edge. He wants companies that have exclusive products or are the low-cost producers in an industry.
The fund owns just 30 to 40 stocks, many of them industry leaders, such as technology giants Intel and Microsoft, and financial-services companies Merrill Lynch and Charles Schwab. The median market value of the fund's stocks is about $5 billion. On average, these stocks trade at 34 times trailing 12-month earnings.
Bickerstaff holds stocks an average of four years and sells when a stock outperforms "our most optimistic projections," or if a company's fundamentals deteriorate.
Bickerstaff spends most of his time visiting with company officials and tearing apart balance sheets and income statements.