Evening star., 1933-04-29

INVESTMENT TRUST
POSITION BETTER
Advance in Stock Market
Has Strengthened Assets
of Companies.
Special Dispatch to The Star.

special Dispatch TO The Star.
NEW YORK, April 29.-The rise In
stocks predicted on the suspension Of
gold payments and its sequel, imitation,
found the various investment trusts of
both management and fixed type in
different degrees Of liquidity and with
varying kinds Of portfolios.
Consequently, some. have profited
considerably by the speculative move
ments in common stocks. The asset
values Of their securities have risen
sharply Others have been less fortu-
nate, though still in q better position
than a week ago. Altogether the trusts
as a class have profited by the change
in the price level of the last few days.
Obviously those management trusts
that have adhered to the policy OF
holding nothing but common stocks
have been the greatest gamers. Some
Of them that early saw the implica-
tions Of imitation and had been carrying
large amounts of cash became consid-
erable buyers Of stocks in the middle OF
last week. A portion Of their pur-
chases they later sold at substantial
profits. What they held prior to We'd
nesday's announcement Is, In most
cases, still below cost, so the benefit
here was In lifting them out Of an un-
promising situation to one that seemed
to favor further improvement in their
lists This has been sharply reflected
In the price of their own shares.
Benefit by Change.
Nearly all Of the fixed trusts. which
were a development following the man
agement trusts. were about 100 per cent
holders Of common stocks of a highly
diversified character. They have bene-
fitted by the change in the market
trend, SO that today there is less talk
of hquidating trusts for which q few
months ago there appeared to be an
unsatisfactory future.
Another group Of trusts which origi-
nally carried out the principle Of wide
turbing conditions abroad which affected
common and preferred stock and bonds,
and included In their portfolios large
amounts OF foreign securities and
whose capital structure consists OF
debentures, preferred stock and COM
mon stock, have not been so fortunate
as their competitors. After three
years of shrinking prices of common
stocks in their portfolios and OF dis
turbing conditions abroad which affect
their holdings not only Of foreign dol
lar bonds but foreign bonds in cr-
rencies. they adopted the policy last
year of reducing their domestic COM
mon stock list and foreign bonds OF
both kinds and investing heavily in
bonds Of American corporations.
In one instance these purchases were
divided between bonds Of first grade
and of comparatively small return and
~, tI,n tv,r vhi ich
the average yield was 8 per cent. The
reduction In their common stock list
has prevented them from realizing the
amount of appreciation that would
have come to them had they retained
their original portfolio. though this has
been to some extent recovered in the
appreciation Of their second and third
quality domestic bonds On the other
hand. their high-grade mortgages have
declined as equities" and speculative
bonds have advanced They also had
substantial amounts Of cash. A few
were buyers last year Of United States
Government securities.
The investment trusts that special
lied in particular groups Of stocks,
such as those Of oil producers, banks
and insurance companies or pubic util-
tiles, have had varying experiences from
the recent movements in stocks. The
oil stock specialists have been favored
To some extent this is true Of those
basing their future values on bank
stocks. On the other hand, the trusts
that were formed in 1929, when public
utilities were the most popular medium
of speculation. have had such a heavy
depreciation that the small average ad-
vance last week in the common stocks
of the power and light companies has
made little change in their position.
Have Averaged On Stocks.
Still another class Of so-called "in-
vestment trusts" are those that have
been formed in the past two years and
whose purchases Of stocks have been
confined entirely to equities" and have
been made at various times when the
market was on the decline. They have
never had to contend with the amount
of depreciation that faced the 1929
trusts, though paper losses have been
heavy where stocks were accumulated on
the breaks in 1881 and in the early part
Of 1892 However, they are nearest to
their cost prices Of any Of the trusts,
for some Of them had the courage to
pick up many Of the low-priced indus
trials when they were selling . few
months ago well below today's level
This has given them an average on
their stocks that might readily bring
their entire list to an average over their
total investment cost, If the market
for common stocks should advance an
other 10 points as it has done 50 far