At the mutual fund industry's annual conference in Washington last month, fund company execs yammered about how the industry might use the Internet in the future.
Robert Walstad, president of tiny
in Minot, N.D., did more than just yammer. He went out and bought an Internet company.
ND Holdings, which claims to be the smallest publicly traded mutual fund company in the country, is taking a 50% stake in
Magic Internet Services
, a small Internet service provider also in Minot.
Walsted's firm, which has $380 million in assets under management and a market cap of only $7.5 million, manages eight mutual funds. But it also acts as transfer agent for other mutual funds, and offers accounting and distribution services for them as well. With just 14,000 accounts and a capacity of 1 million, ND Holdings has lots of idle capacity.
Now it plans to offer Internet access to those accounts and fund companies -- as well as to the general public -- as part of its outsourcing services.
Walstad says offering Internet access to fund companies will make his transferring and accounting services more attractive. But like many in the industry, Walstad says he has no plans to allow customers to buy and sell fund shares, like stocks, over the Internet.
His reason is simple. His funds carry loads, which means they're distributed by brokers who collect a sales commission.
"That's our main source of distribution, so we need to respect the brokers' turf," Walstad says. "Allowing the clients to access their accounts is one thing. To trade those accounts is another."
Wary of Windsor
Windsor fund reopened this week, a decade after closing to new investors. But investors weren't exactly queued up at the doorway. The reopening "did not generate a high level of investor interest," admits Vanguard spokesman John Demming.
For the past few years the fund's deep value style has been
out of favor, causing the loss of
billions in assets. But with value stocks in the limelight again, Windsor is up 14.7% year to date. That's far ahead of the
5.9% return during the same period.
Still, investors shouldn't send cash "just because it's reopened," says Demming. And others agree.
Dan Wiener, editor of the
Independent Advisor for Vanguard Investors
, a newsletter, wants to know more about the managers from
Sanford C. Bernstein & Co.
who have been hired to help out incumbent manager Chuck Freeman. (Vanguard won't say how much of Windsor's $18.4 billion in assets the new managers will oversee, though Freeman will handle the "majority" of the money.)
"We don't know anything about these guys from Bernstein, we don't know how much they're managing and we don't know if they're the kind of guys who buy 10 stocks or 100," says Weiner.
So Long Nick
Nick Whitridge, manager of the $1.2 billion
Babson Value fund, is retiring at age 62, citing health concerns. He's managed the fund since its inception in 1984.
Babson Value has underperformed the S&P 500 for the past four calendar years, according to
. But in 1999, with value back in style, it has returned 11.8% and is beating the S&P 500.
Tony Maramarco, 50, will take over management of the portfolio, and will stick to the fund's value investing style. He has 18 years money management experience and has been with Kansas City, Mo.-based
Jones & Babson
is waiving the minimum investment for the next two months on its incredibly popular
Young Investor fund, managed by David Brady and Erik Gustafson.
"It's in honor of Young Investor's fifth birthday," says spokeswoman Wendy Rauch. "It seemed like a good time."
Not only is Young Investor Stein Roe's largest fund, it also took in $184 million in 1998, by far the most money of any of its funds, according to
Financial Research Corp.
of Boston. For 1999, Young Investor's inflows rank No. 2 behind Stein Roe's
Growth Stock fund.
The performance of the fund, designed to attract kids to fund investing, has been good news for Chicago-based Stein Roe, which has experienced
manager turnover and stagnant asset levels lately.
So until July 30, Stein Roe will allow investors to get into the fund with no minimum investment, as long as they invest $50 a month until their accounts reach $1,000. Previously, the automatic investment plan required a minimum deposit of $100. The fund's minimum for a traditional account is $2,500.
Mutual fund companies usually shy away from small accounts because they're harder to make a profit on. But Rauch says that with assets approaching $1 billion, economies of scale keep the fund's expenses in line. It has a lower-than-average annual expense ratio of 1.3%, despite more than 200,000 accounts.
Stein Roe's brief sale also could also teach kids another valuable lesson from Mutual Funds 101: If you've a got a good thing going, milk it while you can.