PEOPLE: MANAGER OF 70-YEAR-OLD FUND LOOKS BACK, HOPING TO SEE AHEAD

John A. Carey admits he’s just a tad stodgy. As manager of $4.5-billion Pioneer Fund, the Pioneer Group’s flagship growth-and-income fund which celebrated its 70th anniversary last month, he tends to avoid Wall Street’s high-flying favorites and gravitate toward blue-chip stocks like Ford Motor Co. and IBM Corp. He also likes to hang onto shares once he buys them. The turnover among Pioneer’s some 130 holdings last year was 25%, well below the 69% average for growth-and-income funds reported by Morningstar Inc., the rating company.

historian by training

“I guess most people would probably describe me as conservative,” says 48-year-old Mr. Carey, who joined Pioneer after completing his doctorate in history at Harvard University in 1979. “I do tend to respect tradition and I like orderliness.”

Mr. Carey’s calm, methodical nature is reflected in the fund itself. “It’s definitely not the most exciting fund in the world,” says Amy Grazen, an analyst at Morningstar in Chicago. “Still, it has a decent enough track record. It’s a good core holding.”

Pioneer racked up a one-year return of 39.5% for the year ended Feb. 27, compared to the Standard & Poor’s 500-stock index’s 34.99%. On a longer-term basis, the fund hasn’t fared quite as well. Its average total annual return for the past 10 years is 15.70% vs. the S&P 500’s 17.97%, according to Morningstar.

The fund’s lackluster performance isn’t being lost on investors either. Pioneer has seen its share of the $513 billion growth-and-income category drop steadily to 0.79% from 1.75% in 1990.

In the past seven years, Pioneer has managed to pick up only $317 million of some $200 billion that has flowed into growth-and-income funds, says Financial Research Corp., a research company in Boston.

dead in the water

“The fund’s inflows have been pretty dead,” says research company analyst Ray Liberatore. “Much of its asset growth has come from the performance of the market.”

Mr. Carey seems unfaze
d by Pioneer’s lost market share. “Business has been tough,” he concedes. “Countless new growth-and-income funds have entered the market. I think we continue to do OK, however.”

Mr. Carey, who has been at the fund’s helm since 1986, says Pioneer is managed much the same way it was 70 years ago when it was created by Philip L. Carret, the 101-year-old founder of the firm.

“Value is still the key,” he says. “We look for classic companies with enduring value that have the financial resilience and management skills necessary to provide the potential for solid, long-term results.”

Pioneer’s top five holdings at the end of February were: Schering Plough Corp (4.48%), Bank of New York Inc. (2.42%), Ford Motor Co. (2.29%), Novartis AG (1.92%) and IBM Corp. (1.92%). Cash and short-term holdings typically represent less than 1% of the portfolio.

“The fund is primarily domestic in orientation,” says Mr. Carey. “It makes it an easy fund for shareholders to relate to. We like to have names that people recognize, companies that produce goods and services they use in their lives.”

That said, between 6% to 10% of the fund’s assets may be invested in overseas companies, says Mr. Carey. True to his restrained nature, however, Mr. Carey adds,

“Generally, the overseas investments will be confined to well-established industrial companies in Europe.”

While his training as a historian is unusual for a fund manager, Mr. Carey feels investors are generally well served by his sometimes-backward way of looking at things.

“I find that the historical perspective helps me in looking ahead,” he says. “Not that history repeats itself exactly, but there are parallels sometimes.”