Q. I’m an investor in Alger MidCap Growth “B” shares. Has the fund company been able to recover from the loss of so many employees and managers on Sept. 11? What’s the outlook for this fund?
A.S., Chicago
A. It’s working hard to remain competitive.
On Sept. 11, nearly all of Fred Alger Management’s analysts died on the 93rd floor of the World Trade Center. That total, representing 20 percent of the firm, included David Alger, its chief executive officer.
David’s brother Fred Alger, who had previously run the company, is overseeing it. Dan Chung, who had managed funds there in the past, is chief investment officer. They’ve brought back many former Alger employees.
Using such alumni helped get it up and running quickly, but people are taking a wait-and-see attitude as they monitor its managers, analysts and results.
Managed by Chung since Sept. 12, the $381 million Alger MidCap Growth “B” (AMCGX) declined 8 percent over the past 12 months. It had a three-year annualized return of 7 percent. Both results rank in the top one-third of all mid-cap growth funds, which haven’t had a great run overall.
“It’s a solid, dyed-in-the-wool growth fund looking for fast-growing companies, and I think investors who’ve been happy with Alger a long time have reason to stick with it,” said Emily Hall, analyst with the Morningstar Inc.
Alger MidCap Growth “B” (www.fredalger.com) requires a 5 percent “load” (sales charge) and a $25 minimum initial investment.
Q. I’m 49 years old and just got laid off. I had a 401(k) with my former employer. I also have been saving in a Roth individual retirement account. What should I be doing to make sure I have enough money for retirement?
J.R., via the Internet.
A. Run the numbers. Figure what age you wish to retire at and how much income you’ll need, said Vern Hayden, certified financial planner with Hayden Financial Group LLC, Westport, Conn.
“Next, credit any income sources you might have against that number,” said Hayden, who advises rolling your 401(k) into an IRA. “The balance must come from investments, and I suggest you use a 5 percent return as a rule of thumb.”
The Economic Policy Institute found that 40 percent of households headed by someone between the ages of 47 and 64 experience a drop in income of more than one-half in retirement. Yet financial planners contend you’ll need more than 75 percent of your current income when you stop working.
Those 50 or older in 2002 can contribute an extra $1,000 to company retirement plans under “catch-up” tax law provisions. That increases $1,000 each year until it reaches $5,000 in 2006. After 2006, the limits adjust to inflation.
For IRAs, those over 50 can put in an additional $500 in 2002 through 2005 and an additional $1,000 for 2006 and subsequent years.
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Andrew Leckey answers questions Sunday in Business and Tuesday in Your Money. Address inquiries to Andrew Leckey, P.M.B. 184, 369-B Third St., San Rafael, Calif. 94901-3581, or by e-mail at andrewinv@aol.com.
