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Rating:Odd Lots, November 1, 1999 Not Rated 3.0 Email Routing List Email & Route  Print Print
Monday, November 01, 1999

Odd Lots, November 1, 1999

Reported by Hayley Green

Eating returns
From The Wall Street Journal
In an effort to show mutual fund investors exactly how much of their potential return is eaten up by expenses, a handful of Web sites have entered into the tricky land of 12(b)1 fees, level loads and C-shares, attempting to get past the jargon and give answers in dollars and cents. This is a subject that could suddenly seem more important if funds don't continue to generate the double-digit gains that minimize the impact of fees. A site gives the example of a how fund investor with $10,000 can earn an extra $3,000 over 20 years by choosing a stock fund with a low 1%-of-assets annual expense ratio instead of one with a more-typical 1.5%.

The tax bill
From The Wall Street Journal
As predictable as cool fall weather are those unavoidable tax bills. This year, some analysts are predicting that the tax season may be especially harsh. Taxable gains may feel worse this year because they could come alongside less-flattering investment performance than in recent years. Lackluster returns aren't a shield against steep capital-gains tax bills. That's because taxable gains can occur even if a fund is posting a negative return. For example, if a poorly performing manager sells a stock that is down 10% for the year but up 50% since he bought it, the sale will generate a taxable gain for investors with shares held outside of individual retirement accounts.

Schwab gets snippy
From The Wall Street Journal
Schwab's chief strategy officer, Daniel Leemon,  is getting ready to fight. Verbal punches will be directed at rival, Merrill Lynch & Co.  Leemon is criticizing Merrill's fee-based "Unlimited Advantage" brokerage service, claiming it will raise fees for 95% of Merrill customers rather than help investors cut costs. The comments mark the first time Schwab executives have publicly disparaged Merrill's offering. Schwab figures that the average Merrill customer pays 0.7% of assets each year for a Merrill account; customers who use Merrill's Unlimited Advantage service will pay an average of 0.8% of assets a year. Merrill says customers consolidating various accounts into the new program will pay less than if they maintained separate accounts.

Allianz buys Pimco
From The New York Times
Allianz AG announced Sunday it was buying 70% of the California-based Pimco Advisors L.P. in a deal which valued the company at around $4.7 billion, or $38.75 per unit. The two firms have been in talks since July. Analysts said Allianz made a good move in its drive to expand its asset management business and strengthen its presence in the crucial U.S. market even if it was paying a relatively high price for the entry ticket. Allianz said the all-cash deal, which would be financed mainly through bonds.
Related Stories
Los Angeles Times
    Squirreling it away
    From The Boston Globe
    Ralph Wanger, small-cap investor and manager of the 30-year-old Acorn fund, has a nickname that fits his fund's name. The Imperial Squirrel  uses a buy and hold strategy makeing it easier for client families to invest in stocks outside the limelight. Holdings included California banks, some real estate companies, utilities, and retailers. The buy-and-hold philosophy is one reason several small companies evolved into bigger names as their stocks appreciated, and why some fund-rating services have reclassified Acorn from a small-cap to a mid-cap offering.  

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