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To: Softechie who wrote (52)	12/26/2000 2:49:07 PM
From: Softechie	Read Replies (1) \| Respond to of 2155

Mutual-Fund Investors Sit Out The Online-Trading Revolution By STACY FORSTER WSJ.COM The Internet is doing little to change the habits of mutual-fund investors, according to a study to be released this week. American Century Investments, a fund company based in Kansas City, Mo., commissioned a study that suggests that while a minority of investors use the Web to gather information about funds, such usage is leveling off or even falling. And when it comes to buying and selling mutual funds, the Web's role remains insignificant, according to the study. Among investors in American Century's survey, only 11% had made a transaction, up slightly from 9% in 1999. For the study, American Century and Elrick & Lavidge, a market-research firm, conducted interviews with 250 mutual-fund investors who currently use the Internet. The study showed that 34% of fund investors had downloaded a prospectus from the Web, down from 36% who said they had done so in the year-earlier study. And 43% said they had used a fund company's Web site to check a price, down from 47% in 1999. Dave McCalley, vice president of e-commerce for American Century, says the apparent leveling isn't surprising. "There are certain types of investors that could really care less" about actively managing their investments, he says. "They will just put their money in and check it in 10 years." Mutual-fund investors also tend to be less active and less self-directed in managing their investments, he says. Nevertheless, mutual-fund companies are raising their profile on the Web. Nearly 425 mutual-fund companies have Web sites with information geared for individual investors, up from 186 in 1997, according to Lee Kowarski, a consultant with Kasina, a research firm that tracks fund companies on the Internet. About 25% of them allow customers to make transactions, an increase from only 6% in 1997. But while traffic on mutual-fund's own Web sites has been underwhelming, much of the action on the Web may be occurring at mutual-fund supermarkets run by independent companies such as Charles Schwab Corp. and Fidelity Investments, analysts say. These supermarkets allow investors to compare performances and chose from a wider range of services. As a result, mutual-fund companies lose out when investors go to third-party sites to purchase and research funds, says Kelly O'Donnell, an analyst with Cerulli Associates in Boston. "People enjoyed the option of choice, not only the choice in mutual-funds, but the ability to have, in one account, mutual funds and equities," she says. At Charles Schwab's OneSource Web site, online transactions accounted for 60% of the firm's mutual fund trades at the end of the third quarter of 2000, compared with 50% in the third quarter a year ago. Fidelity reports that in November, more than 23,000, or 58% of all mutual-fund trades, were done online, compared with more than 19,000, or 34%, in the same month in 1999. Industry analysts say one of the reasons the mutual fund industry has been overshadowed on the Web by the online brokerage industry is its lack of focus on transactions. Mutual fund investors don't generate the same trading activity as equity investors. Advice tools have been touted as the next wave of development on the Web. But although more investors are going online for guidance about managing their money, the study indicates they don't have much confidence in the advice they receive on the Web. Only 9% of the survey's respondents said they trusted online advice, compared to 14% for telephone advice and nearly 50% for guidance received in person from a financial professional. Mr. McCalley says that level of trust reflects a lack of familiarity of these new tools. He expects that until investors become comfortable with them, they will are more likely to use them as resources for ideas rather than act on them immediately. "You're going to see a lot of people test these against each other as a quick and easy way to get a second opinion," he says. Write to Stacy Forster at stacy.forster@wsj.com