MORE AGITA FOR ROBERTSON STEPHENS: DEALMANIA LEAVES PORTFOLIO HONCHOS FURTHER IN THE DARK

When BankAmerica Corp. announced last week it would sell off its investment banking arm, Banc America Robertson Stephens, executives didn’t mention the fate of its sister company, Robertson Stephens Investment Management.

But the sooner the future of the investment side is mapped out — whether it remains with B of A, is acquired by another firm or bought out by its top executives — the better. The uncertainty comes after a turbulent year. First there was BankAmerica’s acquisition of Robertson Stephens last October. Then BankAmerica announced plans for a $60 billion merger with Charlotte, N.C.-based NationsBank.

Against this backdrop, performance of the funds has been wildly uneven. The result: Investors yanked a net $291.5 million out of the funds in 1997. The outflows are continuing so far this year.

Spokesmen for both BankAmerica and Robertson Stephens Investment Management, a San Francisco boutique with $2.4 billion in fund assets, won’t divulge any details of discussions about the firm’s fate nor would they say if or when a sale of the unit might be announced.

But one thing is certain. Professional financial advisers don’t look kindly on changes in a fund company’s management. Marilyn Capelli Dimitroff, president of Bloomfield Hills, Mich.-based Capelli Financial Services Inc., says “It does influence decisions.”

Ms. Capelli Dimitroff, who recently sold out of some Robertson Stephens funds on behalf of clients, says: “I think most advisers look at the entire package. I look not only at the portfolio manager’s record and expense ratio, but also at the likelihood of consistency in the future.”

Fund experts say the firm’s aggressive style is to blame for the erratic performance, but internal strife clearly hasn’t helped matters.

The firm is grappling with investment losses on its once highly regarded Contrarian Fund. It also recently lost the manager of its Global Low Priced Stock Fund and is asking shareholder approval to fold the $9 million fund into a bigger portfolio. Yet that hasn’t stopped the firm from announcing plans to roll out five more funds, all of them international.

Performance by the big-name stable of portfolio managers has been erratic in the last 12 months. On one extreme, the $360.7 million Contrarian fund run by Paul Stephens, a managing director, saw a loss of 25.06% for the 12-month period ended April 17, according to Morningstar Inc. The fund invests in “growing companies worldwide that have been overlooked or underappreciated by other investors. At times the fund will also seek protection by taking short positions and using put options,” according to the prospectus.

Dismal to dazzling

Meanwhile, the $277.4 million Emerging Growth fund run by Jim Callinan, a managing director, saw a dazzling 12-month return of 63.04% during the same time period, according to Morningstar.

Such is the nature of Robertson Stephens’ freewheeling funds, but some investors didn’t want to go along for the ride. In 1997, the dozen funds saw a net outflow of $291.5 million, according to Boston-based Financial Research Corp. About $410 million in redemptions were from the Contrarian fund. But the funds have seen an almost across-the-board outflow totaling almost $140 million for the first two months of this year, according to FRC.

Laura Lallos, an analyst at Morningstar, says, “A fund like Contrarian, for instance, is bound to have problems given the market it’s operating in. I don’t think that it in any way relates to the BofA people. They (managers) have been left alone on the fund side.”

While financial advisers say the stability of a fund company’s management does influence investment decisions, other factors also come into play. Laura Tarbox, president of Newport Beach, Calif.-based Tarbox Equity Corp., for example, reduced her clients’ holdings in Robertson Stephens funds last year to reduce their exposure to risk.

“It’s just a result of our strategy to become more conservative,” says Ms. Tarbox, who has $60 million under supervision.

Ms. Tarbox says she keeps track of ownership changes in the funds she recommends. “It’s something we look at,” she says. “In most cases, it’s not going to have an effect on how the funds are managed.”

Ms. Tarbox still recommends the company’s Value + Growth, despite her contention that it’s “the most volatile fund we’ve been using.”

vote ahead on fund merger

Relatively high expense ratios drove Ms. Capelli Dimitroff from most of the funds about a year ago.

“I don’t use them much anymore,” says Ms. Capelli Dimitroff, who has $60 million under supervision. “I felt there were funds that had better returns for the dollar.”

The company’s Developing Markets fund is the only Robertson Stephens fund she still uses. She had used the Growth + Income Fund but determined that the fund’s style had drifted.

“The expenses were too high and the fund involved more risk than what I was willing to take,” she adds.

Lack of investor interest sealed the fate of the Global Low-Priced Stock Fund, says Bill Rocco, a Corvallis, Ore.-based Morningstar analyst. Shareholders of the fund, managed by Hannah Sullivan who left in February and now run by Andrew Pilara, will vote this week on whether to merge the $9 million fund with Mr. Pilara’s $173 million Partners Fund, which buys primarily U.S. small capitalization stocks.

The Global Low-Priced Stock Fund invests in U.S. and international stocks priced at less than $10.

“Theoretically, the fund would have invested in tiny, undiscovered companies,” Mr. Rocco says. “It’s like all of Robertson Stephens funds — aggressively value.”