I was about to clean out my email box before
relocation this week to new offices on Wall Street.
But as I was ready to hit "Select All" and then "Delete," I noticed some obvious patterns among the reader mail.
After a lot of sifting, some reading and even a bit of thinking, I've come up with a list of the top subjects for this year.
Share your investing and mutual fund questions on the
Dear Dagen board
It occurred to me that there might be some conclusions about the year to be drawn from this electronic pile of questions and comments. The most obvious one is that this is not your father's mutual fund industry. Your most frequently asked questions were about products that didn't even exist a few years ago, such as Internet funds and exchange-traded index securities.
The popularity of these sexy funds and fund-like securities may simply reflect the nature of the market at this moment. Or perhaps it signals bigger changes to come.
Here's what readers were talking about in 1999:
. No one could have dreamed up a better product for 1999.
The Q, as it's known, was launched in March on the heels of an 85% gain for the Nasdaq 100 in 1998. This year that index is up 94%.
That's called being in the right place at the right time. This exchange-traded portfolio is an unqualified hit. Since its debut, the underlying trust has taken in more than $5 billion in assets.
Investors are obviously interested in the Q, but some have trouble understanding how the security works. Readers have sent in QQQ questions by the truckload.
Simply, the product gives investors an investment in this tech-tumescent index through a single transaction. Unlike traditional mutual funds, the shares trade on the
American Stock Exchange
just like other stocks.
Rather than puzzling over the
underlying structure of this product, investors should probably be more concerned with what they're actually buying with this security: a technology-centric
100-stock portfolio. Close to 75% of the Nasdaq 100 is in the biggest tech stocks on the Nasdaq. However, if you want crispy new Internet stocks, you should look elsewhere. To make this index, a stock usually must have been trading for two years.
The Rest of the Exchange-Traded Family
The Q wasn't the only exchange-traded product on investors' minds.
The Spider, or
Standard & Poor's Depositary Receipts
, tracks the
in much the same way that the QQQ tracks the Nasdaq 100. It has been around since 1993, but piqued investor interest this year.
"Ignoring transaction costs, are Spiders a good proxy or substitute for a S&P 500 index fund, such as the
Vanguard 500 Index?" asked
back in May.
Some proponents of traditional funds, including Vanguard founder
, will tell you this heavily traded security is designed for just that -- heavy trading.
But there is nothing to prevent a long-term investor from buying Spider shares -- paying a typical brokerage commission up front -- and holding them for years. The underlying expenses are the same as for the Vanguard 500 fund, at 0.18% a year. Plus, with more competition coming to this market, these fees could go even lower.
At the beginning of this year, investors were clamoring for funds that would give them a concentrated investment in the Internet. By June, there were still only a handful out there. Now there are more than a dozen, with at least 16 more in registration.
In a matter of months, investors had a significantly wider array of choices, including the
Enterprise Internet fund run by David Alger, the
ING Internet fund and the
Goldman Sachs Internet Tollkeeper fund.
These funds are all doing extremely well, if for no other reason than the fact that all Internet stocks are doing well. Enterprise Internet is up 66.7% over the past 13 weeks. The ING fund is up an unbelievable 113% over the same period.
Internet investors also have an exchanged-traded choice:
security, which delivers a single investment in
20 Internet stocks.
One drawback: You can buy the HOLDRs only in round lots, or increments of 100 shares. You'd have to cough up $18,200 for the smallest investment possible. Maybe this can wait until after those holiday bills are paid.
Ryan Jacob's Internet Fund
The zeal for this young man's money management services was unflagging. From the time Ryan Jacob left the Internet fund in June, readers sent in a steady stream of email asking when they could invest in his new fund and how. OK. He did produce a 517% return for the
Internet fund in his 18-month tenure.
After a five-month wait,
And he'd already raised about $150 million when his eponymous fund started trading earlier this month.
For all his fans, you can reach him via his Web site at
slacker icon hasn't achieved
(Ciccone)-like status. But among the investing set, Stuart is on par with
slightest mention of Stuart resulted in an avalanche of email, with readers praising this pencil-thin pitchman for his antics.
wrote to say that, "Stuart is funny
effective as an attention-getter."
Word to Ameritrade: Tape some new spots.
Please don't start nodding off.
At the end of the day, 401(k) plans remain the primary connection between average Americans and the market. There's an estimated $1.5 trillion in U.S. 401(k) plans.
And readers are wisely obsessed with the smallest details of their plans, from
borrowing rules to
ancillary fees and
Thankfully, investors now have a few more places to turn for guidance in addition to this column.
Financial Engines can project your chances of meeting your financial goals and help you with your asset allocation. And firms like
Fidelity offer extensive sites specifically dedicated to the 401(k) plan.
I'm sure I've missed something. If I have, let me know by emailing me at
firstname.lastname@example.org. I'll be out all next week, but, barring a Y2K catastrophe, I'll get to it all in the new millennium.
Most importantly, have a fantastic New Year.
Dear Dagen 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.