Bill Papesh is sold on mutual funds.
The president of the Composite Group of Funds has been in the industry since the 1960s, when he joined Murphey Favre Inc. after a few years with Washington Trust Bank.
Murphey Favre, by launching its Bond & Stock Fund in 1939, had helped pioneer mutual funds. Papesh said the fund was among the first 50 created in the U.S.
A decade later, the Growth & Income Fund was among the first 100.
Papesh noted the industry did not eclipse $100 billion in total assets until 1980, when only 6 percent of U.S. households were fund investors.
By 1990, assets had multiplied to $1 trillion, and 30 percent of all households were invested. The industry tips the scales today at a whopping $3.7 trillion.
“It’s a very popular mechanism for investment,” said Papesh, who has served on the boards of the Investment Company Institute, the industry’s regulatory body.
Composite, which has eight funds plus a variable annuity product, has about $1.5 billion under management for 90,000 investors, he said.
The funds are separate corporations with their own boards. They contract with Composite for portfolio management, which is handled in Seattle.
Composite also acts as the administrator and transfer agent. Those functions are based in Spokane.
Murphey Favre markets the Composite funds. They are also sold by Washington Mutual, which bought Composite and Murphey Favre in 1982.
The group was the first to be owned by a bank, and Papesh said it was a bold move for Washington Mutual. The thrift, with $2.5 billion in assets, had not yet set off on the acquisition binge that has made it an industry giant.
He said Composite has been able to piggyback on that expansion, although shareholders remain concentrated in the Northwest.
Papesh himself is a Inland Northwest product. He was born and raised in Kellogg, and graduated from the University of Montana in 1965.
His grandfather, W.W. Papesh, had been president of the First State Bank of Kellogg. The 1899 immigrant to the Silver Valley first had run a meat wagon, then bought a meat market in Wardner, Idaho.
“He was particularly thrifty,” Papesh said.
The elder Papesh eventually owned real estate, an insurance business and Chevrolet dealership in addition to his position with the bank.
But Papesh never knew his father, who died in a Jeep accident just two months before he was born in 1943.
Composite’s offices in the Washington Mutual Building are studded with lithography stones etched with the fancy scrollwork and stamps that characterized the stock certificates and letterheads of his grandfather’s era.
Some were collected by Papesh, who has a large collection of Western Americana, especially books.
Papesh also is a woodworker and fisherman in his spare time. He and wife Cheryl have raised a son and a daughter.
He is proud of the Composite-Murphy Favre heritage and comfortable with its conservative approach to investing.
“We’re not reaching for the maximum reward,” he said.
Which is not to say that Composite investors are just scraping by.
The Bond & Stock Fund returned 13.6 percent in 1996, the Growth & Income Fund 22.3 percent. Papesh said the only disappointments were the Tax Exempt Bond Fund, and Northwest Fund.
The Northwest Fund, he said, had been keyed to personal income. When retail activity slumped in 1994 and 1995, the fund’s results suffered.
Since that linkage was broken by a vote of shareholders, the fund has done very well, he said.
But Papesh said selection of an individual fund is less important than how assets are allocated among funds with different objectives, and how funds allocate funds internally.
“The important thing for consumers is to find a fund that parallels their objectives,” he said.
Papesh said many investors overestimate their insight into financial markets.
A bull market of almost unprecedented duration has blurred the risks involved in investing, he said, noting that corrections have stripped 20 percent off the Dow Jones industrial average every six years, on average.
Papesh, who has served on the National Association of Securities Dealers board and the Washington State Securities Advisory Committee, said investor resolve in the face of a bear market has not been tested lately.
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