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Mutual Fund News

Make sure your research kit has the right tools

When it comes to checking out funds, stocks and companies, stick with credible data sources

Glorianne Stromberg has seen a lot of change in the investment industry over the past 15 years.

In fact, the former commissioner of the Ontario Securities Commission prompted some of that change after producing two groundbreaking reports critical of the mutual fund industry in 1995 and 1998.

The Toronto securities lawyer has long been a staunch advocate of greater disclosure for retail investors - so you might think she would be pleased with the explosion of investment information and opinion blogs on the Internet.

Not completely.

"Technology hasn't made the incredible any more credible but it certainly has increased access to it," she says. Overall, the Internet has helped empower the average investor, she says, but instead of unlocking the secrets of the investment industry it has - in some ways - let the industry off the hook.

"It really transfers the onus to the investor to inform him or herself," says Ms. Stromberg, who is also chair of the Public Accountants Council for the Province of Ontario.

"What has changed is the fact that as this information becomes available, regulators decided that there was no longer any obligation to deliver disclosure documents."

In the midst of an unprecedented global financial crisis, where so many experts have been wrong about so many things, Ms. Stromberg says investors need to choose their information carefully to separate opinion from fact. "It's very important to be aware of the sources of information and to compare them before making decisions."

START AT THE SOURCE

Ms. Stromberg says online investors should start by going straight to the source. Mutual fund companies are required to provide a prospectus for each of their funds containing details on its objectives, strategies, risks, performance, distribution policy, fees and expenses, and fund management. The prospectus can be found on the issuing company's website.

The two most popular Canadian mutual fund websites, Morningstar Canada (http://www.morningstar.ca) and Globefund (globefund.com), also provide basic information about funds along with analytical tools that rank past returns, fees, risk level, sector and geographic weightings, holdings and management rankings. "It helps you compare what are seemingly similar funds," Ms. Stromberg says.

Stock sources

If you're looking at stocks, she suggests reading the issuing company's financial statements and annual reports on the individual company website.

Any filing information for publicly traded stocks in Canada can also be found online at the System for Electronic Document Analysis Retrieval, or SEDAR (http://www.sedar.com). The equivalent for U.S. filings is Electronic Data Gathering Analysis and Retrieval, or EDGAR.

Vital firsthand company information can also be found on exchange websites such as the Toronto Stock Exchange, the New York Stock Exchange or Nasdaq - along with other helpful information to compare a stock with other stocks in a particular sector.

Some of the most sophisticated tools for analyzing stocks can be found on websites such as Marketwatch.com, Yahoo Finance (finance.yahoo.ca),

GlobeInvestor.com and Google Finance (finance.google.com). Users have access to information normally reserved for big institutional investors including analyst recommendations, comparative charts, technical analysis and valuation ratios.

ONLINE CALCULATORS

In most cases users can also create and keep records on their own portfolios and get up-to-date alerts when a stock moves or generates news. Several websites offer online calculators to tabulate personal retirement savings, mortgages or tax scenarios.

Not surprisingly, the most sophisticated online features charge fees. As an example, a one-month subscription to Canada's state-of-the art financial website, GlobeinvestorGold.com, will set you back $16 - but for that price you get all the toys.

It includes a feature called Gold Tracker, which allows users to manage their portfolios in one section of the screen; research stocks, set up alerts and monitor the Dow Jones business wires in real time in another section; and watch Business News Network in another section.

David Keith, director of product development for The Globe and Mail's online media division, says October was a record month for The Globe's financial websites, despite - or perhaps because of - the market meltdown.

"When they want to start looking at getting rid of some of the dogs in their portfolios they could spend a couple hours researching something," he explains.

"I think a lot of do-it-yourselfers wouldn't be doing it themselves unless they had the right tools. Otherwise, you just can't keep up."

The latest toy being rolled out by GlobeinvestorGold allows users to isolate a certain point on a chart and call up all relevant information and news pertaining to that stock during that specific time period.

Mr. Keith acknowledges, however, that the site has been a victim of its own success. Many financial institutions now offer similar research tools to their customers as a feature of their online accounts.

In most cases, bank and trading account holders can research their investments on the spot.

Last, but by no means least, any online investment research tool kit requires a basic understanding of finances.

One website that provides definitions for nearly every investing term under the sun is Investopedia.com.

Dale Jackson is a producer

at Business News Network.

© 2007 The Globe and Mail. All rights reserved.

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