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Past interviews
A match made in Heaven
Jade Hemeon
June 9, 2000
Don't judge a book by its cover
David Cooke
June 2, 2000
A comeback for old tax haven
Ned Goodman
May 26, 2000
Strength in numbers
Grant Forster
May 24, 2000
Resources will rock
Roger Mortimer
May 15, 2000
Thou shalt not speculate
Larry Sarbitt
May 5, 2000
More is better than less
Stephen Kangas
May 1, 2000
Bite the bullet
Dan Hallett
April 25, 2000
The New Economy is not what you think
Stephen Waite
April 14, 2000
Rough sailing
Bob Haber
April 10, 2000
Taxing times
Garth Turner
March 24, 2000
Tax tips for everyone
Jamie Golombek
March 17, 2000
She could see it coming
Veronika Hirsch
March 10, 2000
Changes bring opportunities
Chris Jenkins
March 3, 2000
Good guys finish first
Allan Brown
February 25, 2000
For better or for worse, it's a Fidelity fund again
Bob Haber
February 11, 2000
Wealth Management for Everybody
George Mancini
February 4, 2000
Spanning the globe for entrepreneurs
Andrew Waight
January 28, 2000
Boomer fund manager
Ray Steele
January 21, 2000
The only way to go
Duncan Stewart
January 14, 2000
Silicon Valley East, way east
Bhim Asdhir
January 7, 2000


For more past issues, please check our full Fund People archives
  
Focus
Mutual Fund Research
Highlights
  • Where to find fund research
  • What to look for
  • Where to get free advice
    •

    More is better than less

    LEVI FOLK, RICHARD WEBB AND PETER DIPLAROS
    Monday, May 1, 2000

    If your first recommendation of a mutual fund comes from an article or from a friend’s tip, chances are that the fund’s fame is based mostly on a hot performance streak. Hot funds are usually the ones that get profiled in the media, and they are the ones that your friends will brag about. That’s good. But it should only be the first step.

    Stephen Kangas is vice-president of mutual fund research and marketing at Canada Trust. "It should be obvious," he says, "but you should not jump in and make a purchase." Investors should be aware that the practice of impulse buying has crept its way into mutual funds. Stephen is not surprised because he understands some of the reasons people shy away from getting professional advice. "Many people do not know where to look for objective advice in books or on the Internet," he says. "They are also hesitant about using the investment advisor channel." Stephen presumes that there might be some element of mistrust, or insecurity on the part of some investors, or for others, intimidation. "No account is too small or not important enough," he says. "Don’t be intimidated. Get some knowledge and find out which questions to ask, so you won’t be taken advantage of."

    So where should investors look for professional help? Many places, and not just financial advisors, Stephen offers. "You’re already on the Internet, so you might as well use it. You may get some biased information on your fund company’s website, but you will also find out many things about your funds and your fund managers," he says. Other sites like globefund.com can help you learn about funds and get objective reading materials. Then follow it up with research from magazines, newspapers, radio, television, books, newsletters and finally, people.

    What is the most valuable aspect of each research source? Stephen tells us what to look for and how to best use each source for maximum benefit:

    • Internet: The best value is real-time market information and access to archived knowledge. It’s quick, and there’s lots of data available. Find the sites where you can do a lot of things for free. Look for timely opinions and news.

    • Magazines: In the good ones, you should see more in-depth articles, tables, etc. Less news orientation, more subtleties. You can learn about the nuances of funds and how they relate to your overall plan in a long-term context. Stephen’s picks: Mutual Fund Review, IE Money.

    • Newspapers: Don’t watch the daily fund prices, it can lead to wrong conclusions. My favourite is The Globe and Mail, with Duff Young and Gordon Powers on Saturdays, also Shirley Wong, guest columnists and the Mutual Fund section every third Thursday of the month. Use it to learn; the information is very objective. Rob Carrick will sometimes write about funds as well. My caution here is against the tendency to buy something because it’s hot, since that’s what the papers like to write about.

    • TV: No specific fund programming, but a lot of investment programs. Garth Turner’s Investment Television on Sunday is a good pick. His guests engage in free-flowing discussions, which can help you understand how the economy is impacting the funds. The ROBTv channel is dedicated to investments, and Saturday’s Investors Online show on OnTV is also a good show.

    • Books: Usually very objective. The main type of book, the annual guide, will give you ratings or choices. All the choices will almost always be similar in all these books. Try to see if the authors have been recommending their choices for some time, or if they change their mind often. I wouldn’t want to pick just one. I would look at Gordon Pape’s book and my own "Smart Funds." If you own a fund and want to see if it’s any good, Pape will tell you. His book covers a huge number of funds. The "Smart Funds" book examines a few select funds, but there is a fund family orientation that helps add another dimension. This is useful when you need to move your money around within the fund family. We also look at new funds with experienced managers or new funds that have existed in the United States before and have a history to analyse.

    • Newsletters: Gordon Pape, the Fund Counsel, Mutual Fund Advisor are all newsletters you should subscribe to. And since you’re paying, you should something that is hard to come by: opinions. Newsletters are important because they are just about the only source that will tell you when to sell, not just buy, buy, buy! They don’t depend on advertising so they can be objectively tough. The good ones have people who constantly talk to fund managers.

    • Advisors: You have to buy your funds from somewhere; it’s a business transaction. What services do you get from your vendor? All of them have some form of advice or tools. Ask your discount of full-service broker if they have any mutual fund advice. Most of them will say yes. Ask your financial planner how he or she knows if a fund is any good. Nesbitt Burns and TD Waterhouse, for example, both have access to quality fund research. Who are the people behind the research? Is it unbiased? Duff Young also offers a unique "portfolio repair" service through his company, FundMonitor.com.

    The bottom line is, you are paying for your investments and you should be getting value. You can do very well to seek out other research sources but don’t forget that you should be able to get some advice from the people who are selling you the funds. Someone along the line owes you some research or advice. Ask for it.

    Levi Folk, Richard Webb and Peter Diplaros are Investment.com mutual fund specialists and editors of the Fund Counsel newsletter. They can be reached by e-mail at peterd@hqinvestment.com.

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