In 1949, one of the oldest mutual funds, the company now known as Franklin Mutual Shares was established under the name Mutual Shares Corporation by Heine Securities Corporation. This fund recently celebrated its 50th. anniversary with the appearence of it's fund manager on the floor of the New York Stock Exchange, where he espoused the fund's philosophy as a long term large cap. value oriented stock picker.

I noticed this event, although in general I don't pay much attention to mutual funds as a class, because the fund's parent company, Franklin Resources, Inc. is a member of the Poor Man's Hedge Fund portfolio. That membership indicates that the fund manager's monthly returns regress strongly onto the Dynamic Trading Risk Factor. As the fund manager's revenues arise from the fund itself, albeit mostly from the assets under management rather than from incentive fees, as would be the case for a pure hedge fund, it is naturally interesting to ask whether the fund's monthly returns are also explained by the factor. The regression above indicates that this is indeed the case, and strongly so with an R² of 75%; α = (−0.7 ± 0.2) %/month; and, β =1.7 ± 0.1. This is a stronger regression than that we observed for Goldman Sachs, although with less leverage onto the factor and higher (relative) funding costs.