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AIM Global Utilities Scarred inTech Wreck

AIM Global Utilities moves fund away from telecom, toward traditional utilities.

AIM Global Utilities Fund (AUTLX) hasn't had too many places to hide these days. Its 2.5% loss in 2000, a bottom-quartile performance, stemmed in large part from its emphasis on telecom and networking stocks that were shellacked along with other growth shares last year. Manager Claude Cody and his team prize earnings growth, so they loaded up on rapidly growing firms in 1998 and 1999. Although their approach was initially successful, stocks like Redback Networks (RBAK) have sunk more recently, as investors have grown more attentive to valuations. The offering was also light on energy stocks, which enjoyed big gains in 2000. 

The fund is still lagging its peers so far in 2001, but not because it's still top-heavy with telecom. Instead, since late last year, Cody and his team have been rotating the fund out of telecom and tech issues and into traditional utilities and independent power producers. Cody says he's seeing the strongest earnings growth in electric and gas utilities that can act as power generators in areas of the country that are (or soon will be) deregulated. Thus, he has built positions in Exelon (EXC) and FPL (FPL). He also likes independent power producers like Dynegy (DYN) right now for a similar reason, though Cody thinks that they will probably only be attractive for the next year or two, because he thinks capacity will be built out in that industry by then.

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