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Monday, August 1st, 2011
the lion

Howard Stein died last week.  As chronicled in an obituary in the New York Times, as the leader of Dreyfus he was a great innovator in the mutual fund business and, as the headline said, “Helped Teach Public to Invest.”  His work landed him on the cover of Time, sharing it with the Dreyfus lion that he made ubiquitous.

Stein’s career is emblematic of the changes in the mutual fund business, many of which he had a hand in.  At one time, the dominant firms had a fund or two or three by which they were known.  Then came the explosion in funds and distribution channels and the game of gathering assets under management in every way possible.  Today the fund world is overbuilt and facing a serious competitive threat from ETFs.

But once it was a pretty simple business.  The Dreyfus Fund, started in 1951, was one of those funds that defined its firm.  So I thought I’d take a look to see how it’s fared the last couple of decades when the spotlight has been elsewhere.  The dot-com years featured positive returns for it, but account for almost all of the fund’s relative underperformance to the market over that entire period.  It’s amazing how little variability there has been versus the market since the turn of the century.  It’s hard to believe that the fund only has about a billion dollars in assets, and is now ranked #601 in size among U.S. equity funds.

Stein’s legacy lies elsewhere, however, and his work shaped the fund industry and the markets themselves.  If you’re into that sort of thing, you may want to go to Wikipedia and update the Dreyfus page to at least make mention of this lion of the business — and while you’re there please rewrite the turgid prose that appears to be copied from the company’s website.  (Chart:  Bloomberg terminal.)