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The Media's Fund-Picking ProwessMay Make Investors Dream of Bogle

Just when you thought you were safe from more fund-picking magazine cover stories, two new ones landed on the coffee table--



Business Week

. And, like their counterparts from

Money, SmartMoney


Mutual Funds

magazine, these two tell you why


method is really


method for "building a winning fund portfolio" or something exciting like that.

The Street

isn't in the business of recommending funds. We stick to giving our members the skinny on who's doing well, who's trading what, who's moving where. The news.

And we also believe in accountability. We tell you which pundits have a good track record, and which chin-scratchers don't. In that spirit, we offer our two cents on the fund advice the magazine world is offering you.

TheStreet Recommends

Business Week

They call this a guide. We call it a monstrosity. A befuddled quant-head's dream-come-true,

Business Week

provides more than 25 bits of data on more than 800 equity funds, including a microscopic trend chart for each fund. If that's not enough, there's a handful of smaller charts equally replete with fund arcana. Useful? Perhaps for an Excel spreadsheet workshop. But not if you are actually trying to figure out where to invest your money. As for the retort that it's a good resource to keep handy, that's an anachronism. With monthly, weekly and daily fund data available on the Internet, there's no need to use yesterday's news, let alone last month's.



Business Week, Forbes

provides another virtually useless lists of page after page after page of funds and numbers and funds. But at least


introduction to the figures gives some value-added, and value is the key word.


makes no secret of its value orientation--one that would translate into some serious missed opportunity for fund investors over the last couple of years. But at least it's got a viewpoint. If you share it, you'd be better off looking at


mutual fund survey in its Aug. 26th issue, available at, which provides more analysis, along with the famous Forbes "Honor Roll" of mutual funds.


What a disappointment. Here's a magazine that's revamping its personal finance section ("Personal Fortune") with some truly interesting mutual fund stories, and for its "best funds" story it dishes up another list. Its featured new development over last year's list--the elimination of multiple share classes of the same fund. How did they think of that? The big mystery is why


even bothered, when its time could clearly be better spent.



Business Week, Forbes

, and




butters its bread by providing personal finance advice. So it's got to be held to a higher standard. And to its credit,


provides 11 specific fund recommendations and even accompanies them with a morsel of insight on the magazine's methodology. But some of the picks are not exactly worry free. Take


(BRWIX), to be sure a top performer. As


points out, its minimum initial investment is $25,000. For lots of investors, that's quite a chunk of change to shovel out in one lump sum.

Then there's

T. Rowe Price Equity Income

(PRFDX). Sure, it may be a safe bet, but


says that over the last ten years, on average, the fund has underperformed the S&P 500. Is that advice you need to pay for?

What's most disconcerting about the


piece is what it


say: How the magazine's nine picks from last year fared. How could a magazine that urges its readers to look at funds' past performance not come clean about its own? We'll get


started. One pick,

Crabbe Huson Equity

(CHEYX), returned 12% in 1996 and placed 600 of 673 growth funds tracked by

Lipper Analytical Services


Mutual Funds


Talk about specialization. Here's a magazine that should know its stuff, and it often does. Wildly successful

Interactive Investments Technology Value

(TVFQX) appeared in its "Undiscovered Fund" column in October, well before its charts-topping success drew the eye of the competition. But


magazine suffers the same shortcoming as


--it doesn't keep track of itself. It does say that its 10 picks for 1996 on average beat the S&P 500. But it doesn't tell you how each individual fund did, and no one really buys all 10 funds. A look at the specifics in its 1996 top 10 list speaks for itself: One was Fidelity Magellan.

(The original version of this story read as follows: But the MF magazine list includes everything from sector to international to bond funds, and nowhere is the list recommended as a model portfolio. So the S&P 500 test becomes irrelevant. A look at the specifics in its 1996 top-ten list speaks for itself: One was Fidelity Magellan.)


Now here's a cover story that's actually helpful. Unlike

Business Week, Forbes, Fortune


Money, SmartMoney

doesn't papers its pages with lists of the top thousand and one funds. Rather, it picks seven. And unlike those magazines, it doesn't just regurgitate data from




. Rather, it seeks advice from an individual analyst with his own proprietary system that looks at more than the typical risk/return indicators. Best of all--it tells you exactly how its picks from 1996 fared. The bad news? None of its 1996 picks beat the S&P 500.

Oh well, you can't have everything.

By Jamie Heller

Note: Jamie Heller was formerly a reporter for