Morgan Stanley's Focus Growth Fund: A Brief Analysis

by: Dr. Osman Gulseven

In a recent article, I discussed the top holdings in Morgan Stanley’s portfolio. According the latest 13F filings, Morgan Stanley’s (MS) year-to-date performance was mediocre and below the S&P 500 (SPY) return.

The investment banks mutual funds have been lagging behind the market since the last decade. The mediocre performance of investment banks portfolio shows that they take hard-earned money and invest in under-performing assets. They also charge management fees and hidden costs such as front-end/back-end loads, plus commissions you never heard of. Some companies charge up to 3% in management expenses. I was checking which funds Morgan Stanley offers and whether there is any fund that is worth to pay for. It was a long search, but I finally noticed one: Morgan Stanley Focus Growth Fund. Managed by Dennis Lynch, the fund was able to offer outperforming returns to the holders. The fund’s average annual expense is 1.77 with a turnover rate of 40% in the last year.

According to the latest N-CSR file submitted to I-Metrix Edgar-Online, focus growth fund has outperformed the SPY with a large margin of 50% in 2009. 2010 return was 25%, still beating SPY by 10% point and Russell Growth 1000 (IWF) index by 9% point. The fund has a diversified portfolio with 97% invested in common equities. There is a little bit more weight towards Internet companies. Here, are the top holdings and their year-to-date performance:  continue reading here at Seeking Alpha