Views on the market
Interview: Pioneer Investments--- Carey, John--- Fund Manager
>> welcome back. financial stocks were among the worst performers today as the mutual and mutual fund investigation pred to five more companies, including the nation’s largest discount broker, charles schwab and p.n.c. financial say regulators are looking into whether trading practices hurt mutual fund investors. schwab says there may have been a, quote, limited number of instances, unquote, in which orders were given a price that they were not entitled to because they came in after 4:00. that’s illegal and hurts ordinary investors. three other companies face disciplinary action for allegedly failing to provide discounts owed to fund investors. they are american express, was cove i can’t and legg mason. and the prosecutor who started the investigations is complaining about the securities and exchange commission, which is conducting a parallel investigation. we’re talking about new york attorney general elliott spitz ir. he says the s.e.c went behind his back in reaching a settlement with putnam investments. the commission defends the settlement even as state regulators in massachusetts say they’re widening their putnam investigation. and financial company raymond james received word from the s.e.c and nasd today, this just crossing, the company saying that it has received a communication from the s.e.c and nasd and it may involve penalties, resolution, it says, may involve penalties and the communication involves mutual fund commissions. moving on. technology stocks have helped drive the stock market rally so far this year. but now it appears that investors are beginning to shift cash out of the markets best performers and into the laggardses and our next guest says he expects that to continue. he is john carey, fund manager at pioneer investment, joining us from boston with his views on the market. thank you for joining us.
>> hi, bob.
>> let me first bess again with these headlines before we get to your market forecasting and ask you about the mutual fund scandal. to some, this industry is under an investigative siege and i don’t think that would be described as an overstatement. in the past 24 hour, we’ve had american exexpress, charles schwab, p.n.c. financial, legg mason, in what i just described in the previous story, do you feel under siege? and comment on what you’ve heard so far.
>> it is obviously going-to-be an extended periods of examination and self-examination. and we’ll just have to see what comes out of this. there may be new regulations. i’m sure there will be new self-governance procedures, new codes of ethics, new business practices at many firms in the industry. we’re all just watching and waiting and i think the important thing always for people in the financial services business is to remember, though, that
>> that it is a service business and the interest of the kleins come first and foremost. that is what we’ve always paid attention to at pioneer, the interests of our clients and that’s what we’re doing the today―looking to the interests of our clients.
>> just one of the examples, legg mason says the s.e.c and nasd may take action against the company for failing to give what they call what’s break point discount, means nothing passing along discounts to customers who make large mutual fund orders. what is pioneer’s position on this issue? in other words, do you pass along these break point discounts?
>> well, we sell our funds through broker-dealers, insurance agents, financial planners. we’ve always used intermediaries to distribute our funds. and it’s really up to the interimmediate yares to apply the proper sales commissions to the fundss that they’re selling.
>> ok.
>> we hope everyone is acting responsibly as always.
>> investors should not expect a press release from pioneer funds in the near future regarding an investigation of your company, in other words?
>> well, i―i can’t comment. this is an ongoing area of concern for the industry and i think rightly so for shareholders and for the government. and we’ll just have to wait and see what happens.
>> now let’s talk about sector rotation, which was originally why you were booked to be on the show. you say that it’s―we’re in the air of transition. tell us what is you are rotating into and why.
>> well, first of all, we’re always fully invested and always with a broadly diversified portfolio. but we do make some shifts andst now and again. we do base our decisions on prospects for individual companies. i think it is fair to say that the general news that was not so well known at that time beginning of the year, name lift that the economy is doing pretty well, is now quite broadly known. and there is not an awful lot of money to be made today from that insight that the economy is on the mend. a lot of stocks have already responded. obviously technology has done very well. some other groups have been laggardses. health care, utilities. i think some of the resources companies. and energy. energy is a very interesting area i think in terms of disparity between the great increase in earnings, particularly the big international oil companies, and the very sluggish stock price movements. in particular --
>> i’m sorry to interrupt. particularly four of the top five holds of your fund, energy stocks , what is your call there? what do you know about energy that other people might not know?
>> constellation is actually utility, it’s the former baltimore gas and electric. you are quite correct. we have major investments in energy companies. we’re basically value investors and we like cheap stocks and we like dividends. those are all dividend-paying stocks and all of them with relatively low multiples on current earnings and earnings that we can project over the next couple or three years. so, we think they’re a relatively good place to be in a market where there is some overvaluation.
>> john carey, fund manager at pioneer investments. thank you for joining us. when we come back, lowes is getting more women into its stores and that may have helped the company boost sales. we’ll be right back.
