Evening star. [volume] (Washington, D.C.) 1854-1972, 1930-04-30
FIXED TYPE TRUST
RETURNS TO FAVOR
But Management Corpora
tons Are Still important Fac-
tor in Investment Field.
BY CHARLES F. sPEARE.

Special Dispatch to The Star.
NEW YORK, April 3o.-The swing
back in public favor Of the "hxed" type
of investment trust after a year in
which the management" form Of trust
and the trading corporation held first
place in the minds Of investors and
Spectators was emphasized yesterday
in the offering of a large issue Of COM
mon stock by new concern on whose
directorate are half dozen men promi-
nent in corporation affairs in this
country.
An attempt has been made in this
new corporation to combine the arbi.
trary features Of a fixed" trust with
the more elastic policies Of manage
ment" trtIst.
The announcement made With the
stock offering states that "tha invest-
ment policy of the corporation coneem-
plates taking relatively PERMANENT
Gas distinguished from a trading) posi-
ton in those securities which may be
selected for investment" Under the
form of fixed" trust the securities
held in portfolio are deposited with
| q trustee, who holds them in trust for
| the certificate owners. As the term
| fixed" indicates, they may not be re-
moved or substitutionS made after the
/ participating shares have been publicly
distributed.
Advantage to Investor.
The advantage which the investor in
these shares is supposed to have Is that
of knowing at all times Just what
stands behind his investment. In the
management" type of trust authority
Is given to buy and sell securities at
will and to make any kind of substitu-
| q tn, Hn iTn fINa fvatn ~
the general portfolio, and therefore in
that of the investor in the company's
securities.
In order to combine the element of
| greater stability which the "hxed" trust
is assumed to have with the broader
powers for taking advantage of market
situations. this new corporation permits
its directors to effect substitutions when
changing conditions make this desir-
able. No additions to the list of COM
panies whose shares are owned can be
made without unanimous vote Of the
board OF directors. The investment
holdings of the new company are di-
vided into "a separate units, of which
20 represent industrials, 8 public utili-
ties, 3 railroads, l a bank and ! an
| insurance company.
It Is estimated that at present about
5000, 100000 is located in the fixed"
form Of investment trust, or four times
as much as year ago. This is still
small proportion of the total capital in
vested in various forms of investment
trust and finance companies whose ag-
gregate assets are between $4,000, 000, 900
and $500, 100000.
fixed" trust represents a distinct
change in the investment trend in re-
cent months. It indicates that the
public which gives over its capital to a
group of men for the purpose of de-
veloping a diversified form of invest
ment is more disposed now than before
to consider safety of principal and re-
turn on this principal than to attempt
to obtain an appreciation through spec
ulative ventures.
| More Mergers Expected.
The fixed" trusts had their proper
ton of depreciation last year in their
portfolios. but there were no outstand-
ing shrinkages among them comparable
to those represented in the manage
ment" trusts and trading corporation
statements at the end Of 1929. The
| largest declines in the stocks of this
general group were in those whose direc-
tors had the full play of their power
to buy and sell all forms of securities,
This comparison also has been an ele-
ment in creating more favorable atti-
tude toward the fixed" trust and to
permit a wider distribution of their
shares through active selling campaigns.
1t is expected there will be further
mergers OF investment trusts this year,
as, in spite OF the recovery in the
stocks represented in trust portfolios,
a considerable number still show that
cost prices are well above market prices.
The difficulty of securing competent
management has compelled number of
the smaller corporations to sell out
Others are in a mood to listen to offers
that may come from the larger and well
managed concerns in this field.