How the pros invest their money

Black Enterprise, April, 1995 by Rhonda Reynolds

Since this working wife and mother is raising a two-year-old, she swears her money won't go into anything exploitative."

Even though her personal style displays a high level of risk, Grace advises her clients according to their own individual goals and risk tolerance. As a matter of fact, she even advises her partner, Bridgforth, who is much more conservative with her investment dollars.

About 10 years ago, Bridgforth was managing $90 million in assets as a branch manager of a Wells Fargo bank in Alameda, Calif. Sudden attrition by key employees caught her by surprise. Overwhelmed by the extra work and spending money recklessly, she left her job and tried to survive on a smaller income comprised of disability payments and a shrinking savings account. Getting her own act together inspired Bridgforth to create her own financial counseling practice.

Now Bridgforth plays it safe. Her portfolio sports 80% in mutual funds and 20% in a money market fund. A fan of dollar-cost averaging, her monthly deposits are going into the Putnam Fund Growth & Income, which last year reported a -0.3% total return. But the fund delivered a respectable 8.5% total return on investment over the last three years.

Understandably wary about risky investments, the 42-year-old Bridgforth has no qualms about going outside of her debt-management specialty and seeking long-term fiscal guidance. "It's important to move ego out of the way and go out to get help, especially regarding your savings plan," she says. "The future is all you have."

IN HIS OWN BACKYARD

John Rogers Ariel Capital Management

John Rogers, president of Ariel Capital Management, likes to keep his money close to home. So when he fishes for investment vehicles, his favorite place to look is not necessarily in a stock or mutual fund but in the city he calls home, Chicago.

Rogers likes to invest in "my own backyard." That 228-square-mile yard includes investments in First Chicago (NYSE symbol: FNB), McDonald's Corp. (NYSE symbol: MCD) and Aon Corp. (NYSE symbol: AOC). Last year, First Chicago gained 10.4% and McDonald's total return equaled 2.6%. Meanwhile, Aon lost 0.8% and Morrison Knudsen (NYSE symbol: MRN), the exception to his "backyard" rule, lost the most--49.3%.

Rogers, who "almost never sells a stock," won't invest in the airline industry, but everything else on the major stock exchanges is fair game. But stocks take up just 10% of his investment portfolio. For now, Rogers places 90% of his investment dollars into mutual funds.

However, the base requirement before other fund managers get his check is a proven track record. Furthermore, Rogers insists that "there has to be a name [he knows] on the door." So, hobnobbing with top fund managers gives Rogers (and his 40 institutional clients) a personal edge. Last year, his personal portfolio's return hit 12%.

Rogers' 12-year-old asset management firm has $1.8 billion under management and an additional two mutual funds of his own design. And Rogers is looking to start a fixed-income fund. Last year, Ariel Capital took control of the Ariel Growth fund from Calvert Securities for $3.1 million (see Moneywise, February 1995). "It was tough to buy them out," he reflects. But now, with its no-load status, things may turn around for the fund whose 1994 return was down 4.22%. Rogers' money is also tucked away in a few other fund tills: the Yacktman Fund, which commanded an 8.80% return; and Longleaf Partners, which offered 8.96%.