Minnesota investors sweating it out

Keith Holloman checks his mutual fund portfolio about once a month, and over the past year, what he has been seeing there hasn't been easy on the eyes.

"My portfolio has dropped quite a bit," he said. "It's back to 2006 levels. So the drop has been between 10 and 15 percent."

With 10 to 15 years until his retirement, Holloman said looking at a shrinking portfolio is painful. If he were 10 years older he said he'd definitely be more worried.

But Holloman's trying to keep in mind that the drop hasn't come all at once. He said it started about a year ago.

"The recent slide has only been about 3 percent. So emotionally I've recognized that," Holloman said. "I've tried to stay true to my course, versus going in and making changes."

So far we've had a few calls, but by "few," I really mean a small number.

Holloman's investments are mostly in mutual funds. He hasn't made any changes in his holdings for about six months, when he eliminated some redundancies in the kinds of funds he carries. He likely won't go in anytime soon to toy with the mix again.

Some local financial advisors say surprisingly few clients want to pull their investments.

"So far we've had a few calls, but by 'few,' I really mean a small number," said Rick Schuett, manager of investor services at Minneapolis-based Sit Investments. "We haven't seen a spike in call volume due to the recent market volatility, less than I would've expected."

Schuett said in the past few days the company has received fewer than a dozen calls from clients worried about their portfolios; about half as many have actually dumped shares of the funds they're in. That's out of Sit Funds' 10,000 clients.

Schuett said most callers simply want to know about Sit's exposure to dicey stocks, which he said is low.

"In general they call just to see what's happening, will ask if we hold one of the news headline stocks, maybe AIG or Lehman, something like that," Schuett said.

According to the Investment Company Institute (ICI), the national trade association of the mutual fund industry, the number of redemptions of mutual fund shares is up about 10 percent in the first seven months of this year, compared to the same period last year.

ICI spokesman Mike McNamee said the bigger issue is that consumers are holding back. The net new flow of cash into mutual funds is down about 51 percent compared to the same period last year. But even still, McNamee said the sky isn't falling.

"We don't see this as a huge flight from mutual funds," McNamee said. "The phenomenon that our economist usually describes is that people tend to freeze up, they're taking money out of stock funds, they're putting a lot of it into money market funds, because those are more liquid and have less market risk, but they're also just not stepping up to the plate with new money, the normal flow of new money that we would see."

McNamee said the industry is seeing nothing that could be called a "run on stocks," where investors en masse demand to liquidate their portfolios.

Alexander Barned, head of UBS Wealth Management in Minneapolis, agrees.

"No crystal ball on my side," Barned said. "But it doesn't look like we're going there at this point in time."

Barned said he has not seen signs of clients fleeing the market in droves. And he said the best way to protect against stock market volatility is for individuals to check the allocation of their investments and make sure they're comfortable with their mix of stocks and lower risk investments.

"If you haven't done a plan for yourself, you need to go ahead and do one," he said. "And diversification and asset allocation have, will be, and continue to be what's going to allow an investor to go ahead and be successful."

But what do financial advisors say when they're speaking privately, say with friends around a campfire? Regina Rippel of St. Paul got to hear an advisor hold forth in this manner recently. And she said her fireside chat with the advisor vindicated her desire to stay away from the market altogether. Rippel asked the financial advisor friend where he would put his money these days.

"And he said I would keep it at home basically."

Rippel sold off her mutual funds five years ago, and said she has no plans to go back.

Gallery

Fullscreen SlideshowPrevious Slide

1 of 1

Next Slide