|reprinted from Santa Barbara News-Press, Wednesday, February 26, 2003, page B1|
Business Unlimited / Frank Nelson
Has the performance of your financial investments over the past year or two given you an ulcer? If so, you're not alone. And you're also not a client of Montecito money manager Frederick Harnsberger.
Even as the struggling U. S. economy has been chewing through profits and into stomach linings, Mr. Harnsberger's company, Marathon Investment Programs, has been notching positive results quarter after quarter, year after year.
Mr. Harnsberger, popularly known as Fritz, offers three distinct types of investment programs. One, a high-yield bond program, was awarded a zero on the Ulcer Index in the latest MoniResearch newsletter.
MoniResearch, a 20-year investment industry watchdog, analyzed the performance of more than 80 asset managers and rated the high-yield bond program a top performer over five years. Only one other investment adviser in the country scored so well.
A zero on the Ulcer Index means there have been no losing quarters from 1998 through 2002, with the annualized percentage return (after 2 percent fees) being 7.8 over the five years, 8.3 (for the last three years) and 8.6 (two years).
That zero rating contrasts with scores of 119.9 for the Nasdaq and 51.9 for the S&P 500. In addition, more than a dozen investment companies scored higher than 50, with the two worst recording money (and gut) burning ratings of 133.1 and 122.6.
High-yield bond clients are not the only ones pushing aside the antacid tablets and reaching for celebratory drinks. Two other programs -- sector rotation and international -- which both involve stock-heavy mutual funds, are also performing strongly.
Though his father was a stockbroker, there was little in the early career of Fritz Harnsberger to suggest the 53-year-old was destined for the top flight of money managers.
The Los Angeles native graduated with an engineering degree, added a master's degree in business administration and embarked on a 15-year executive career in engineering and research and development with various scientific firms.
Over the years he filed a number of invention patents, including ones for a blood oxygenator used in open heart surgery, plastic lenses for cataract patients, and a special hinge used on sailboats.
By 1992, Mr. Harnsberger was thinking about starting his own development company. But he decided the process was too complicated, and the time between "here" -- he said, tapping his head -- and "here" -- he tapped his pocket -- was too long.
Instead, with business partner Bill Beckers, he turned his sharp analytical skills to professional money management. The pair started Marathon Investment Programs which in 1993, its first full year, returned 35 percent, more than three times the market gain.
Today he runs the company with the help of two office assistants. Individual clients need a minimum investment of $100,000. Marathon currently manages more than $20 million in funds from 67 households.
Mr. Harnsberger said innovation was the key crossover element from his previous career.
"With investment I try to look for the technique which has an edge, the one which produces profits without too much risk," he said.
Marathon programs invest exclusively in no-load (no dealing fee) mutual funds, though at any time the company may keep all or much of its cash in the money market, waiting on the sidelines to "cherry pick" the best opportunities that come along.
The ulcer-free, high-yield program is tied to very specific upward swings in the bond market. Mr. Harnsberger's systems identify the trends, get on board for a ride which may last anywhere from days to weeks, and jump off just as the curve starts heading south.
In a company that rates logic, statistics and computer analysis way above sentiment, Mr. Harnsberger said discipline and market timing are crucial.
In the sector rotation program, for example, Marathon moves in and out of areas like banking, health or energy on a daily basis.
Any profit is the signal to get out. That's the golden rule -- there's no waiting to see if the market will move up further the next day. A loss usually triggers the same swift exit, though sometimes the spreadsheets will dictate holding for another day.
"Whether the market is trending up, down or sideways, there is always an industry sector group that is outperforming the overall market," says the company's Web site at MarathonIP.com.
Another key to the success of his company may lie in Mr. Harnsberger's individual approach to investing. "I don't like to lose money," he said. "It's a personal thing."