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CNN Live Today
Top Five tips for Mutual Fund Investing
Aired June 05, 2003 - 10:19 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
LEON HARRIS, CNN ANCHOR: We've seen a pretty rough ride of late on Wall Street. However, things are starting to improve quite a bit. The road is smoothing out, the major indices finally starting to move higher.
So, the question we have now is, what does all of this mean for mutual fund investors?
Well, let's turn now to "SmartMoney" magazine's senior writer Lauren Young to answer that question. Lauren joins us now from New York.
Good to see you, Lauren. How are you?
LAUREN YOUNG, "SMARTMONEY" MAGAZINE: Hi, Leon.
HARRIS: All right, the numbers are starting to look better and better now coming from Wall Street. For those who are holding mutual funds, let's start to offer your top five tips for them.
No. 1 being, you say that the indexes are still the way to go?
YOUNG: That's right. Indexing still works for a lot of people. It's a great way to invest, because you're buying a basket of stocks, you're not really thinking very much about, you know, what's good, what's bad. It's just kind of a big basket there. They're very tax- efficient, because they don't really buy or sell stocks very quickly. And they're also very cheap, and we all love a good bargain.
HARRIS: Oh, yes, big time. Big time. Now, does that include the Nasdaq as well? Because that's where a lot of people got burned buying on that index in that market.
YOUNG: That's a great question, Leon. Actually, I would say right now, when I'm talking about index, because I think the S&P 500 is probably the best one. It's up about 12 percent this year, but down about 6 percent over the past 12 months. So, that might not look so appealing to you.
However, the Nasdaq even though it's actually done quite well, I would stay away from the technology sector. Avoid technology. Because you know what? Technology led in the '90s. A lot of strategists dont think it's going to be the leader, you know, going forward. We like the health care sector a lot better.
HARRIS: Yes, now, you also say that small companies are the ones that will probably lead the way out of the recession. What do you mean by that?
YOUNG: Coming out of the slowdown, as we've had, we know smaller companies do tend to lead the way because they are leaner and meaner. They really have cut to the bone, so they are very poised to turn around.
Now, when you think small, you want to think about a small cap fund, because small companies are harder to pick. They're not very followed by Wall Street. So, think about buying a small cap mutual fund.
HARRIS: All right, now, if I'm looking amongst the different choices out there for funds, give me some advice on how I pick one that doesn't cost me too much.
YOUNG: Fees and expenses. You know what? Everybody looks at returns. Past performance is no guarantee of future results. We know that. But they rarely look at fees and expenses. So, this really kind of leads me into my next tip, which is: Do your research.
Now, one great Web site out there is Morningstar.com, and you can find out about fees, you can find out about expenses, you can find out about track records. You can also find out about taxes. So, lots of stuff on that Web site.
HARRIS: All right, as a matter of fact, that's your fifth tip this morning is where you can research any kind of fund on Morningstar. And that's -- has that been around for a long time?
YOUNG: Yes, Morningstar has actually -- they're the leader in the mutual fund industry in terms of research, and they really do a good job of providing lots of information, and it's actually one of my most favorite Web sites. I have it bookmarked.
HARRIS: OK, good deal. Maybe that's what we'll do as well. Thanks, Lauren, appreciate that. Lauren Young with "SmartMoney" magazine, good to see you.
TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com.
Aired June 5, 2003 - 10:19 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
LEON HARRIS, CNN ANCHOR: We've seen a pretty rough ride of late on Wall Street. However, things are starting to improve quite a bit. The road is smoothing out, the major indices finally starting to move higher.
So, the question we have now is, what does all of this mean for mutual fund investors?
Well, let's turn now to "SmartMoney" magazine's senior writer Lauren Young to answer that question. Lauren joins us now from New York.
Good to see you, Lauren. How are you?
LAUREN YOUNG, "SMARTMONEY" MAGAZINE: Hi, Leon.
HARRIS: All right, the numbers are starting to look better and better now coming from Wall Street. For those who are holding mutual funds, let's start to offer your top five tips for them.
No. 1 being, you say that the indexes are still the way to go?
YOUNG: That's right. Indexing still works for a lot of people. It's a great way to invest, because you're buying a basket of stocks, you're not really thinking very much about, you know, what's good, what's bad. It's just kind of a big basket there. They're very tax- efficient, because they don't really buy or sell stocks very quickly. And they're also very cheap, and we all love a good bargain.
HARRIS: Oh, yes, big time. Big time. Now, does that include the Nasdaq as well? Because that's where a lot of people got burned buying on that index in that market.
YOUNG: That's a great question, Leon. Actually, I would say right now, when I'm talking about index, because I think the S&P 500 is probably the best one. It's up about 12 percent this year, but down about 6 percent over the past 12 months. So, that might not look so appealing to you.
However, the Nasdaq even though it's actually done quite well, I would stay away from the technology sector. Avoid technology. Because you know what? Technology led in the '90s. A lot of strategists dont think it's going to be the leader, you know, going forward. We like the health care sector a lot better.
HARRIS: Yes, now, you also say that small companies are the ones that will probably lead the way out of the recession. What do you mean by that?
YOUNG: Coming out of the slowdown, as we've had, we know smaller companies do tend to lead the way because they are leaner and meaner. They really have cut to the bone, so they are very poised to turn around.
Now, when you think small, you want to think about a small cap fund, because small companies are harder to pick. They're not very followed by Wall Street. So, think about buying a small cap mutual fund.
HARRIS: All right, now, if I'm looking amongst the different choices out there for funds, give me some advice on how I pick one that doesn't cost me too much.
YOUNG: Fees and expenses. You know what? Everybody looks at returns. Past performance is no guarantee of future results. We know that. But they rarely look at fees and expenses. So, this really kind of leads me into my next tip, which is: Do your research.
Now, one great Web site out there is Morningstar.com, and you can find out about fees, you can find out about expenses, you can find out about track records. You can also find out about taxes. So, lots of stuff on that Web site.
HARRIS: All right, as a matter of fact, that's your fifth tip this morning is where you can research any kind of fund on Morningstar. And that's -- has that been around for a long time?
YOUNG: Yes, Morningstar has actually -- they're the leader in the mutual fund industry in terms of research, and they really do a good job of providing lots of information, and it's actually one of my most favorite Web sites. I have it bookmarked.
HARRIS: OK, good deal. Maybe that's what we'll do as well. Thanks, Lauren, appreciate that. Lauren Young with "SmartMoney" magazine, good to see you.
TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com.
