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Free delayed quotes just don't cut it anymore.

Over the weekend I spoke on two panels at

The Plain Dealer's


seminar in Cleveland. And I quickly realized that many investors are looking for a lot more than basic investing tools on the Internet.

I started covering financial services firms and the Internet about two and a half years ago, and I can remember when free quotes with a 20-minute lag were considered a breakthrough.

Now they are as omnipresent as


wire stories.

Some sites already are offering free real-time quotes these days, including

Raging Bull, (though you have to be a registered user to access them). One panel attendee announced he was looking for real-time streaming charts. Others asked where they could find information on options and insider buying and selling.

Other MoneyWatch attendees seemed to have a keen interest in initial public offerings. Not a surprise. When some investors think about IPOs, their thoughts immediately go to a name like


(EBAY) - Get Free Report

-- which is up over 1,200% from its offering price -- rather than a stock like



. (Conoco is down 13% from its offering price.)

For those of you who are interested, you can find some IPO news on

Yahoo! Finance. You should also check out

Renaissance Capital's

site at The Greenwich, Conn.-based firm, which runs the


IPO Plus Aftermarket fund, offers IPO news, calendars, pricings and rankings, among other things.

With online trading flourishing, interest in Internet brokers was high. If you aren't trading online and are trying to figure out how to choose an online broker, you should start by reading the


Online Brokers Survey.

Vanguard Admiration

Answering one reader's

question last week, I explained the difference between the

(VFINX) - Get Free Report

Vanguard 500 Index fund and its

(VTSMX) - Get Free Report

Total Stock Market fund.

Reader Chuck Miller had this to add: "If I had $50,000 to invest for 34 years, and it had to be a Vanguard index fund, why not the

(VIGRX) - Get Free Report

Growth Index fund?"

"It just so happens I was faced with this problem last year," Miller writes. "But I'm 63, so I split the $50,000 in two, with $25,000 going to the Growth Index fund and $25,000 in the regular

(VQNPX) - Get Free Report

Growth & Income fund. ... If I had it to do over again, I'd put the whole $50,000 in the index fund until such time that I need some income."

All in the Fund Family

Is there greater risk in having most of your money with one fund family, or should you spread it around? -- David Campbell


Similar physical characteristics and personality traits invariably show up in a family. I, for example, come from a family of skeptics.

A family of mutual funds, of course, won't have the same laugh or the same nose. But a firm's funds will often resemble one another.

Sometimes, the similarities are on a relatively macro level. Fund firms often specialize in single style of management (say growth or value, quant or fundamental analysis). A family may wind up with funds owning similar stocks or carrying heavy weightings in the same sectors.

"You should go under the impression that they are not giving you diversification," trumpets Robert Levitt, a financial adviser with

Levitt Novakoff

in Boca Raton, Fla. "If you put all your money in one style, that might increase your returns in one year if you guess right. But it also increases your risk."

Similarities can extend beyond style to individual stocks. Be particularly conscious of redundancy when examining similar funds from the same complex. If you are looking at all large-cap funds, "make sure you are not overweighting yourself in any one stock," says Ron Roge of

R.W. Roge

in Bohemia, N.Y.

I took a look at three funds from


, a shop known for its growth approach.

Rummaging through the top-10 holdings of the


Janus fund,


Janus Twenty and

(JAMRX) - Get Free Report

Janus Mercury -- all categorized as large growth funds by


-- I found much of the same inventory.

At the end of last year, all three funds owned good chunks of


(CSCO) - Get Free Report



(MSFT) - Get Free Report



(PFE) - Get Free Report


Time Warner


. The Janus fund and Mercury were both holding


(CMCSA) - Get Free Report

. Also, Twenty and Mercury both owned




America Online



Suffice it to say that if you owned these three funds and nothing else, your money would be concentrated in a relatively short list of stocks; you may be less diversified than you realize. (Yep, there's that D word again.)

Janus is by no means the only firm where such redundancy exists. About a month ago, we reported on

the repetition in six


funds, and



Steven Syre


Steve Bailey

noticed the similarities as well.

How does this overlap happen? Well, fund managers often aren't lone gunslingers. For one, a fund company may employ a team of analysts from which the managers draw their ideas. A firm's managers may also rely on group discussions to generate stock suggestions.

Research Redundancy

When you are out shopping for new funds or reevaluating your existing portfolio, you should first examine the industry weightings of each portfolio, says Levitt. "You want to have money in various sectors." If your funds each have large allocations to technology and pharmaceuticals, as examples, then you may not be getting needed diversification of risk.

You should also take a look at each fund's top holdings. "I think the top-10 holdings is enough. You get a good flavor of what the manager is doing," says William Dougherty of Boston consultant

Kanon Bloch Carre

. Any visible overlap in the largest stocks should be a red flag that you might be too concentrated in few names.

The Exceptions

Despite the above illustrations, investing exclusively with one family may not result in duplication in your portfolio. If you are buying an equity fund, a bond fund and an international fund from one firm, there is a much slimmer chance of any redundancy.

"Overlap is not as big of an issue as you think if you stick to the top-20 families," says Dougherty. "These families have become so big and have so many offerings. The style of the fund company might be value, but that doesn't mean they don't have growth funds."

Still, be careful when "diversifying" within a single fund complex. The complex may offer various styles, but you may want to seek out different firms for their own specialties. "There is something to be said that some managers tend to be best at one specific thing. You might want to go to different firms for various areas of expertise," says Levitt.

A tip from my editor,

David Landis

: If you are investing in one family merely to avoid receiving multiple statements, then you may want to think about investing through a fund supermarket, like

Charles Schwab


Closed-End Fund Sources

I have heard from a couple of readers who are looking for places on the Internet to find information on closed-end funds. I know of a few.

Closed-end funds sell a fixed number of shares and invest the proceeds in securities. Some closed-end funds invest in stocks of a specific country, like Spain, or an industry, like real estate. These funds' shares trade like stocks on exchanges like the

New York Stock Exchange

. Low demand for a fund can cause closed-end shares to trade at discounts to the value of their assets. High demand can create premiums.

The Internet Closed-End Fund Investor site has been mentioned to me by several people. The site delivers some information for free, such as quarterly performance reports and an online tutorial. But you will have to pay for deeper data. The site's basic subscription service, which includes profiles and performance tables for each closed-end fund, costs $20 a month (or $120 a year if prepaid). The advanced service ($30 a month or $150 annually if prepaid) offers greater customization. Check it out. If anything, you can take a gander at the site's list of the 500-plus U.S. closed-end funds.


TrustNet gives away its information for free, but very little is focused on U.S. closed-end funds. Most of the data, provided by investment bank

Warburg Dillon Read

, centers on U.K. funds.

You can get the prices of closed-end funds on plenty of financial sites, including I particularly like the profiles on

Yahoo! Finance (this site does keep coming up) for some funds.

But reader

Guy Benson

is looking for a place on the Internet that tracks the premiums or discounts to net asset value, or NAV, at which closed-end funds are trading.

The Wall Street Journal Interactive Edition delivers closed-end fund tables that include each fund's NAV, the price at which it's trading and its premium or discount. In the Money & Investing section, you will find a link to the Markets Data Center. There, under mutual funds, is a link to the section on closed-end funds, with data provided by



Of course, you will have to buy a subscription to the publication if you don't already have one. A combined annual subscription to the online



Barron's Online

costs $59 if you are not a print subscriber, $29 if you are.

I don't like to write about sites if they are not operational, but there is another alternative on the horizon that is worth mentioning. The

Closed-End Fund Association

, a not-for-profit membership organization for closed-end investment companies based in Kansas City, Mo., is launching its own Web site sometime in March. The site's address will be


The free site will deliver daily NAVs for close to 400 U.S. closed-end funds, says Brian Smith, executive director. For another 100-plus funds, the site will report the weekly NAV numbers. The site also will carry daily prices for all the funds and show their trading premiums or discounts. You will also be able to find additional information, such as educational materials and links to other company sites.


, which provides data to The Internet Closed-End Fund Investor, will be doing the same for this site.

Desperately Seeking Fund Directors

You are paying them, but it's not so simple finding out who they are.

Lately, the opaque role of your mutual funds' directors has garnered more attention than usual. This week, the

Securities and Exchange Commission

convened a two-day roundtable to discuss the subject. (See our

coverage of the event.)

Maybe the SEC should first make it easier to find out who serves on these boards. If you own stock in a public company, a list of directors is easy to find. It's usually in the annual report. That's not always the case for directors of mutual funds.

There are a few ways to go about unearthing information on fund directors. You can call the toll-free number on the back of a fund's prospectus and ask the company to mail you the statement of additional information, or SAI. Remember those words.

A statement of additional information is different from a fund's prospectus. For one, the fund company is not required to deliver the SAI to every investor; it merely has to provide the document upon request. And it is, quite frankly, an ugly legal document that is no pleasure to read. However, it does contain information on your mutual fund's board of directors, including their names, backgrounds, addresses and compensation.

If you call a fund company to request an SAI, you should know to ask for that document by its full name.

I called a few mutual fund companies and inquired, "How would I go about getting information on a particular mutual fund's board of directors?" That general question led to loads of confusion at some firms. Some of the phone reps had absolutely no clue what I was talking about.


T. Rowe Price

, a rep responded with the following: "I can give you a manager's name or I can send you a prospectus." I asked about the statement of additional information. "There is something called that, but the board of directors is in the prospectus," he said.

Well, at T. Rowe Price, it's not. "The prospectus gives the investment advisory committee," says a T. Rowe Price spokesman. "I think he probably confused the board with the investment advisory committee. It is better to make it crystal clear when you call."



, I also encountered complete befuddlement when I asked the above question. The four people to whom I spoke had no idea what I was talking about. Does it have to be this hard?

Part of the problem may have been that I was asking for the board of directors. At some firms, the same body of people is called the board of trustees.



, this search is not so exasperating. The board of directors is listed on each fund's annual and semiannual report. If you want the finer details on the boards, again, you will have to look in the SAI.

I also looked on the Web sites of the three abovementioned firms, but none of them posts the funds' SAIs online. I suppose if they saw enough investor interest in the documents, they would start delivering them on their sites.



find statements of additional information on the Internet, but they are in the SEC's EDGAR database. And that's where a lot of fund companies will direct you.

When I downloaded a prospectus for the

(PRGIX) - Get Free Report

T. Rowe Price Growth & Income fund from the T. Rowe Web site, I immediately saw the following message:

If you would like to electronically access additional information about the fund after reading your prospectus, you may do so by accessing the Securities and Exchange Commission Web site (at that contains the Statement of Additional Information regarding the T. Rowe Price Funds.

That sounds a lot less complicated than it is.

Using the SEC's own

EDGAR site, you can go to "Special-Purpose Searches" under "Search the SEC Database." Once there, go to the prospectus search. The SAIs are lumped in with the fund prospectuses.

You may have to fiddle with the fund's name. Often, the filings will appear under a slightly different name than the actual fund or the fund company. For example, filings for the


funds appear under

Harris Associates

, the funds' adviser.

Your search will likely turn up a lengthy list of documents, particularly if you are searching within a large family like T. Rowe Price. (For this family, you should use the keyword "Price.")

Here's one helpful hint: Use your browser's Find tool. Plug in the words "statement of additional information." That way you can quickly search each document to see if it's the one you need.

If you are using other sites for searching the EDGAR database, such as

FreeEDGAR and

EDGAR Online, you can look for Form 497 or 485.

Once you've uncovered the SAI you are looking for, you will have to wade through the legalese of the documents themselves. That is another trauma altogether.

1999 High-Yield Bond Outlook

There seemed to have been a lot of hype at the end of 1998 about how the place to be for 1999 was going to be in high-yield (junk) bonds or funds. Is this still the opinion of the advisers? How much money do they think can be made? What are the yields available now through funds? -- Joseph Ellebracht


While the real bargain-basement days are over for the high-yield market, junk bonds still are nowhere near as pricey as they were through the end of July, and the people who stake their reputations on this sort of thing continue to forecast outsized gains for the sector this year.

Value in the high-yield bond market is measured by how much excess yield the bonds offer over risk-free Treasury bonds, known as the spread. The wider the spread, the more value high-yield bonds offer. (High value doesn't mean low risk, however. In fact, it means just the opposite; spreads widen to compensate the investor for the risk that things will get even worse for the sector.) As measured by the

Merrill Lynch High-Yield Corporate Index

, high-yield spreads got as narrow as 313 basis points last year on April 28 before widening to as much as 680 basis points on Oct. 16. As of last night, the index spread to Treasuries was 542 basis points. The long-term average spread is about 375 basis points.

Based on expectations that the economy will continue to grow in the 3% to 4% range this year, market strategists are predicting total returns in the 8% to 11% range for high yield this year, compared to less than 1% last year as measured by most indices.

Goldman Sachs

is looking for returns in the 8% to 10% range.

Merrill Lynch

expects around 9%.

Salomon Smith Barney

is predicting around 10%. And

Bear Stearns

sees the sector returning 11%. (The other major firms wouldn't tell me what they're looking for.)

As for the yields currently available on high-yield bond funds, as of last Thursday the average fund was yielding 9.1%, according to


. (For any individual fund, you can use our

Tools of the Trade to draw a chart that will tell you its yield.)

Do Junk Bonds Move with Stocks?

I would like to know the correlation between junk bonds and stocks. Most gurus simply say that junk moves up and down with equities. Is this true, and if so, is there a quantitative correlation between stocks and junk bonds in up and down markets? -- Anna Maxes


Broadly, it's true. The performance of high-yield bonds is closely correlated with the performance of stocks, particularly in comparison with risk-free government bonds.

Analysts measure the correlation of total returns between asset classes using something called regression analysis. Basically, it generates a measure of correlation on a scale of negative 1 to 1. A correlation of 1 between two asset classes means they behave in a very similar manner (e.g., one goes up, the other goes up). A correlation of negative 1 indicates an inverse relationship (e.g., one goes up, the other goes down). A correlation of zero means there's no discernable relationship between the two.

Looking at the period of 1986 to 1998 (there was no meaningful junk-bond market prior to 1980),

Ibbotson Associates

calculates that high-yield bonds' correlation to the

S&P 500

was 0.49. Intermediate-term government bonds, by contrast, had a correlation coefficient of 0.25.

As important, however, as the overall analysis is a look at the performance of the S&P 500 month by month to determine how the correlation changes with the performance of the stock market -- in answer to your question about up vs. down markets.

According to analysis by Ibbotson research consultant Gary Baierl, in months when the S&P 500 returned more than its monthly average for the period, high-yield bonds' correlation was 0.24, while the government bonds' correlation was 0.29. But in months when the S&P returned less than its monthly average for the period, high-yield bonds had a 0.49 correlation, while the government bonds' coefficient was negative 0.06. Bottom line: High-yield returns are more closely correlated to stock returns than government bond returns, but they are more correlated to stock returns when stocks are doing poorly than when stocks are doing well.

Why is this so?

Moody's Investors Service

economist John Puchalla says rises and falls in high-yield bonds' correlation with large-cap stocks appear to be related to changes in the short-term interest rates controlled by the


. In periods when the Fed is lowering the fed funds rate to stimulate the economy (which typically benefits stocks), the correlation falls. When the Fed is raising rates to curb growth (which typically hurts stocks), the correlation rises.

It makes sense that the correlation would drop during periods when the Fed is easing, Puchalla says, because falling interest rates suggest earnings trouble ahead for companies, and earnings trouble is a bigger issue for the smaller companies that issue junk bonds than it is for large-cap companies.

"High-yield bonds are acutely earnings-sensitive, which means even if rates are falling, spreads may widen," he says. "So overall, the increase in high-yield might not be that dramatic." Ironically, in this scenario interest-rate cuts are more beneficial to the stocks than to the bonds.

Likewise, when the Fed is raising rates, presumably because the economy is cooking, the earnings outlook is probably improving. That should tighten the spreads on high-yield bonds, even as rising yields erode some of their value. Again, ironically, rising rates may hurt the bonds less than the stocks.

And it makes sense that high-yield bonds' correlation with large-cap stocks is stronger when stocks are doing poorly than when they're doing well, Puchalla says, essentially because high-yield bond investors react in a bigger way to bad news than to good news. In other words, high-yield spreads widen more quickly when the earnings outlook is deteriorating than they narrow when the outlook is improving. "When the economy is improving, spreads would be narrowing, but maybe not as dramatically as they would be widening in a downturn," the economist says.

Having said that, it's important to recognize that huge changes have swept the high-yield bond market since its inception in the early '80s, changes that suggest that forming expectations based on the past may not make much sense.

Without going into too much detail, the high-yield bond market began as primarily a financing tool for leveraged buyouts, collapsed in 1989 and 1990, and has been rehabilitated as a source of capital for small- and mid-cap companies.

"The high-yield asset class has changed so dramatically since the mid-1980s, even over the last five years, that it's tough to make any kind of generalization," says Ben Kao, high-yield market strategist at

Goldman Sachs

. He says Goldman's research on this topic concluded that, over the long term, the high-yield market "isn't that correlated with the S&P to any meaningful degree."

Much of what you heard about the close correlation between high-yield bonds and stocks may have been articulated during the first seven months of last year, when Kao says the correlation reached 0.92. But since the market's October collapse, the correlation has fallen off sharply as investors have become more selective about which high-yield bonds they buy, he says.

Elizabeth Roy answers your bond fund questions on Friday. Dagen McDowell answers general mutual fund questions Monday through Thursday. Send questions on their topic to, and please include your full name.

TSC Fund Forum aims to provide general fund information. Under no circumstances does the information in this column represent a recommendation to buy or sell funds or other securities.