| News
Roundup
By IndexFunds.com Staff
February 4, 2002 |
|
Fund service expenses
A new study by Lipper estimates mutual fund shareholders coughed
up $11 billion in shareholder-servicing expenses in 2001. According
to Lipper, the average shareholder pays 2.8% of assets for services
like online research tools, telephone representative service,
and personalized performance reviews. The study looked at 663
mutual fund complexes.
Additionally, the study found that mid-size fund shops generally
have lower service expenses than the large firms due to labor
outsourcing. Not surprisingly, Lipper also found that funds sold
directly to investors have lower fees than those sold by intermediaries.
January summary
Broad domestic and international indexes continued to slide in
January.
| Index |
Jan 2002 returns |
Returns since 9/11/2001 |
| Dow Jones Industrial Average |
-1.01% |
3.27% |
| Dow Jones STOXX 50 |
-3.31% |
9.55% |
| Dow Jones Asian Titans 50 |
-5.58% |
-10.54%
|
| Dow Jones Global Titans 50 |
-4.30% |
1.44% |
Source: Dow Jones Indexes
| Index |
Jan 2002 returns |
| S&P 500 |
-1.56% |
| Nasdaq Composite |
-0.84% |
| Russell 1000 |
-1.37% |
| Russell 2000 |
-1.11% |
| Russell 3000 |
-1.35% |
Source: Reuters
In the U.S., the Dow Jones technology sector rallied to
become the biggest winner in January, gaining 1.2%. The worst-performing
sector was Dow Jones telecommunications sector, which shed 8.16%
of its value during the month.
Look before you leap
Despite a weak year for the stock market in 2001, small-cap funds
and particularly small-cap value performed relatively well. The
Barra SmallCap Value index was up a scorching 13% in 2001, while
the broad Wilshire 5000 index lost nearly 11% over the same period.
Investors may be tempted to jump in and catch some of that performance,
but many small-cap funds are shutting their doors to new investors,
which should ring alarm bells. According to Morningstar, 11 small-cap
funds stopped taking in new cash in 2001, and Putnam Investments
said it will close its small-cap value fund this month.
When several funds in a hot sector of the economy close their
doors to new investors it's usually a sign that the peak has come
and gone. Morningstar senior fund analyst Scott Cooley says investors
need to practice caution and avoid chasing recent performance.
"We saw a similar thing happen in 1997 when lots of small-cap
value funds closed to new investors," said Cooley. "Small-cap
fund managers are fairly conservative and will stop taking in
new cash when their fund becomes too big and they don't see a
lot of opportunities out there in their given style."
I pity The Fool . . .
In a letter
to the community, Motley Fool founders David and Tom Gardner asked
members to pony up a small fee to access the site's popular discussion
boards. Personal finance chat rooms like those hosted by Yahoo!,
Morningstar, and other sites have attracted countless denizens
who thus far have been able to participate free of charge.
To eavesdrop on what the best and brightest have to say about
passive investing and maybe put in your own two cents, drop by
our industry-lauded discussion
boards.
