Fund manager produces sterling results: Prudential American Equity Fund showed gains of 47%

Black Enterprise, May, 1996 by Juliette Fairley

C. Kim Goodwin became a mutual fund manager because she was looking for objective and quantifiable results. She got what she was looking for. As the manager of the Prudential American Equity Fund (416-296-0777), Goodwin outperformed the benchmark S & P 500 of 35% in 1995 with gains of 47% since the fund's inception.

Her mission as a Prudential fund manager, she says, is to provide her clients with above-average returns and to contribute to long-term capital appreciation. She must be doing something right: It was the top-performing fund in the Prudential mutual fund family for North America and the U.S.

Her investment strategy is one of consistency and discipline. "I come from a very disciplined investment background," she says. "I started out as an analyst, and I learned that you'll find weak players and strong players. So my job is to identify strong players."

Goodwin, who has a B.A. in politics from Princeton and an M.B.A. in finance and an M.S. in public affairs from the University of Texas at Austin, is one of a handful of African American women fund managers in the finance industry. "As one of the few, I'm always hoping to see more. I'd love to have more company," says the 36-year-old Goodwin, who has been managing mutual funds for Prudential since 1993. "I try to act as a mentor, formally and informally, and I'm willing to talk to people about what they might like to do in the finance industry."

Goodwin got her start at Mellon Bank in Pittsburgh. She worked her way up to assistant vice president, managing portfolios for pensions, endowment funds and high net worth individuals. The advantage of managing your own fund is that your performance is independently verifiable, she says. "You either do well or you don't. You get feedback on a daily basis, and in this business numbers are everything."

She launched the $6 million Prudential American Equity Fund on Jan. 18, 1995, and it didn't take long for it to start showing results. The fund surged 30% by June 1995. The fast-track portfolio manager attributes the fund's performance to overweighting in technology stocks. "It was clear that technology would perform," Goodwin says. "I diversified in the middle of the year and started moving into a number of consumer names. Those did pretty well."

Goodwin says she hasn't changed her strategy much for 1996. She's still overweighted in technology by 20%. "I've been more selective and moved away from semiconductors and into computer software and networking companies," she says, adding that 35% of her investments are currently in consumer name brands, drug companies in particular.

The portfolio contains large- and mid-cap companies. Its largest holding is Luxottica, a manufacturer of eyeglass frames. Goodwin bought it at $41 and it's currently trading at $72, which is a 76% increase. Other holdings include Gucci, Tiffany, Disney and Clear Channel Communications. What she looks for are stocks that are trading at P/E multiples lower than their five-year projected earnings growth rate.

The fund consists of about 37 stocks and is only open to residents of Canada. Goodwin, however, also manages the U.S. portions of three global funds that are available domestically, the $500 million Prudential Global, the $200 million Prudential Global Genesis and the $600 million Prudential Series Global Equity. The U.S. portions of the Series and the Global Genesis funds, which total $250 million, performed in-line with benchmarks for 1995.

Prudential Global is a large- to mid-cap fund with 18% of its assets in the U.S. Many of the holdings from the Prudential American Equity Fund are also included in the Prudential Global fund.

On the other hand, Prudential Global Genesis, a small-cap fund with 20% of its assets invested in the U.S., is less diversified than an independent portfolio. Among the U.S. portion of investments, the largest holding is Globalstar Telecommunications, a satellite communications company, which she purchased at $23; it is now priced at $54. Another stock, Objective Systems Integrators, rose from $19 to $41 1/4 a share

What does she say of her success as a fund manager? "It's good to have your own fund to see what your real contributions are. You do everything from soup tO nuts, from strategy to analytical work," she says.

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