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Hancock Financial Industries Stumbles

Brokerages and asset managers falter in early 2001.

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Just about everything that helped John Hancock Financial Industries Fund (FIDAX) in 2000 has hurt it so far in 2001.

Insurers, brokers, and asset managers powered ahead last year, but they've suffered in 2001's early going. Investors realized in late 2000 that Federal Reserve interest-rate cuts were imminent, so they migrated to the financials that are considered to have the greatest rate sensitivity: banks with big lending operations. Although this fund's lead manager, Jim Schmidt, believes that most banks aren't all that rate sensitive these days, investors' perceptions haven't changed. Meanwhile, with the market selling off in early 2001, brokers and asset managers have taken a hit. Charles Schwab (SCH), Morgan Stanley Dean Witter (MWD), and American Express (AXP) have all suffered significant, double-digit losses so far this year. In posting a 10% decline for the year to date through March 5, 2001, the fund lags more than 90% of its specialty-financial rivals.

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Scott Cooley does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.

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