Family Fund Profile: The Utopia Funds

by Ann C. Logue

Mutual fund companies aren’t usually thought of as start-up operations, but that didn’t stop Paul Sutherland.  At the end of 2005, his investment management firm, Financial & Investment Management Group, launched the Utopia Funds.  Paul Sutherland, the company’s founder, did it because the firm had too many clients with small accounts that were difficult to serve well.  For example, a customer might have hundreds of thousands of dollars in a trust account as well as an IRA account with about $10,000.  The IRA money was too small to manage in the same fashion as the trust portion. Although Sutherland looked at existing mutual funds that might work, he couldn’t find any that he liked. “We didn’t think that they could do as good a job as we could do,” he says.  Besides, clients came to Financial & Investment Management because they liked the firm’s style.  With the Utopia Funds, all clients could receive uniform investment management for all of their investments.

In addition to managing money, Sutherland has written a few financial books, including “Twelve Steps to a Carefree Retirement” (American Medical Association Press, 1999), “AMA Physicians Guide to Financial Planning (American Medical Association Press, 2007), and “Zenvesting” (Ten Speed Press, 1999).  The latter is aimed at people who are just getting started with investing, most of whom are well suited for mutual funds.  Sutherland found that he when he talked to his readers, they wanted recommendations of funds.  That was another driver for Utopia Funds.

There are four Utopia funds:

• Utopia Growth Fund (UTGRX): an aggressive growth fund that returned
   5.00% in 2007.

• Utopia Core Fund (UTCRX): designed to be moderately aggressive, this
   fund earned 4.46% in 2007.

• Utopia Core Conservative Fund (UTCCX): this fund’s objective is growth
   and income for conservative investors, and it was up 7.40% in 2007.

• Utopia Yield Income Fund (UTYIX): although it is primarily invested in
   stocks, this fund is managed for income and returned 7.20% for 2007
 

There are investment advantages to having mutual funds as part of a large money management firm, Sutherland says.  In the mutual funds, the firm can invest in high-priced shares or in indivisible assets that would otherwise be difficult to allocate among client accounts.  Likewise, if the analysts find interesting ideas that are too small to allocate fairly, they can be bought in the funds.

In terms of style, the Utopia Funds analysts follow themes based on long-term future trends: water, human migration, nutraceuticals, and alternative energy.  Within those sectors, they look for value.  “We realize that price matters,” Sutherland says.  “We’re not buying into a bunch of manias.”  The funds do not have a strict investment style as long as the investment objectives are met, so both value and growth stocks are considered.  All of the funds are free to invest in anywhere in the world, not just in the United States.

Financial & Investment Management has more than $700 million in assets under management, with about $300 million in the mutual funds.  The firm is based in Traverse City, Michigan, which is not exactly a global financial capital.  That’s okay by Sutherland and Company.  Utopia’s staff has access to the same electronic information that everyone else does, and they travel frequently.  And while they may be off of Wall Street, they aren’t exactly out of the loop.  “We may be part of the real world here,” Sutherland says. “We might understand a little more what the consumer is going to do.”

The funds are sold directly to investors without a load, and there are no 12b-1 fees, either.  Sutherland is a little frustrated by mutual fund rating systems that don’t give credit for the manager’s entire track record, which he thinks have kept investors from finding out about the funds.  The Utopia Funds prospectus includes 10 years of returns for the firm’s growth, balanced, balanced conservative, and yield income accounts compared to relevant investment benchmarks, and they are competitive.  These composites measure the performance of the firm’s different individual accounts, and they are designed to correspond with the investment objectives of the four mutual funds.

Still, Sutherland is happy that the Utopia Funds will qualify for Morningstar rating in 2008, because that will help bring in new investors.  “We’ve designed these funds to be complete solutions for people, which is what I think mutual funds were originally designed to be,” he says.

The Utopia website: www.utopiafunds.com

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