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American Morning
Minding Your Business: Brokerages Actually Refunding You Money
Aired July 17, 2003 - 07:49 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.
SOLEDAD O'BRIEN, CNN ANCHOR: Turning to business news. One brokerage firm has a plan that it says will give money back to investors. Will it work?
Andy Serwer has got more. He's "Minding Your Business."
Hey, good morning.
ANDY SERWER, "FORTUNE" MAGAZINE: Good morning to you. That was early for Tucker, wasn't it?
O'BRIEN: Yes.
BILL HEMMER, CNN ANCHOR: He says he never wakes before 9:00 a.m. This was really early for him.
O'BRIEN: Thank you, Tucker.
SERWER: Thanks for being here.
HEMMER: It kind of looked like it a little bit, too.
(CROSSTALK)
SERWER: Yes, I think that's right.
O'BRIEN: That's all right.
SERWER: Anyway, Soledad, stocks have been swooning for the past couple of days, reminding us perhaps that we're not out of the woods yet in terms of the economy and the stock market. Just ask the mutual fund business. They've been hurting a little bit. And to lure investors back into their funds, they've been cutting fees. Fidelity, a couple of months ago, cut fees on its funds. And yesterday, E*Trade announcing that it will offer rebates to investors. Wow! Rebates, I like that. That's good news.
Here is how it works. These are 12(b)(1) fees, a little esoteric setting. Basically, they're taking 0.4 percent of your money every year, OK? Here is how it works, though, and it supposedly covers promotion and sales, usually less than 1 percent, like I said 0.4. So, if you have less than $50,000 in one of their mutual funds, they're taking 200 bucks a year. Now they will send you back $100 a year.
(CROSSTALK)
HEMMER: Is there a catch in this?
SERWER: No, there is no catch. I mean, if you have -- and they're offering the same funds that, say, a Charles Schwab is. So, very interesting, it will cost you $100 less if you have that fund through E*Trade than Charles Schwab, obviously putting a lot of pressure on other fund companies.
HEMMER: Interesting.
O'BRIEN: It will be interesting to see if they will follow suit, huh?
SERWER: It will be. And we should tell people, though, also, Soledad, this morning futures are sharply, sharply lower. Investors not happy about earnings news coming from IBM and Nokia out of Finland. Yesterday, as I mentioned, a down day. Boeing will be announcing today 5,000 job cuts as well. So, some sour news on the economic front.
O'BRIEN: All right, Andy, thanks for that.
SERWER: OK.
TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com.
Money>
Aired July 17, 2003 - 07:49 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
SOLEDAD O'BRIEN, CNN ANCHOR: Turning to business news. One brokerage firm has a plan that it says will give money back to investors. Will it work?
Andy Serwer has got more. He's "Minding Your Business."
Hey, good morning.
ANDY SERWER, "FORTUNE" MAGAZINE: Good morning to you. That was early for Tucker, wasn't it?
O'BRIEN: Yes.
BILL HEMMER, CNN ANCHOR: He says he never wakes before 9:00 a.m. This was really early for him.
O'BRIEN: Thank you, Tucker.
SERWER: Thanks for being here.
HEMMER: It kind of looked like it a little bit, too.
(CROSSTALK)
SERWER: Yes, I think that's right.
O'BRIEN: That's all right.
SERWER: Anyway, Soledad, stocks have been swooning for the past couple of days, reminding us perhaps that we're not out of the woods yet in terms of the economy and the stock market. Just ask the mutual fund business. They've been hurting a little bit. And to lure investors back into their funds, they've been cutting fees. Fidelity, a couple of months ago, cut fees on its funds. And yesterday, E*Trade announcing that it will offer rebates to investors. Wow! Rebates, I like that. That's good news.
Here is how it works. These are 12(b)(1) fees, a little esoteric setting. Basically, they're taking 0.4 percent of your money every year, OK? Here is how it works, though, and it supposedly covers promotion and sales, usually less than 1 percent, like I said 0.4. So, if you have less than $50,000 in one of their mutual funds, they're taking 200 bucks a year. Now they will send you back $100 a year.
(CROSSTALK)
HEMMER: Is there a catch in this?
SERWER: No, there is no catch. I mean, if you have -- and they're offering the same funds that, say, a Charles Schwab is. So, very interesting, it will cost you $100 less if you have that fund through E*Trade than Charles Schwab, obviously putting a lot of pressure on other fund companies.
HEMMER: Interesting.
O'BRIEN: It will be interesting to see if they will follow suit, huh?
SERWER: It will be. And we should tell people, though, also, Soledad, this morning futures are sharply, sharply lower. Investors not happy about earnings news coming from IBM and Nokia out of Finland. Yesterday, as I mentioned, a down day. Boeing will be announcing today 5,000 job cuts as well. So, some sour news on the economic front.
O'BRIEN: All right, Andy, thanks for that.
SERWER: OK.
TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com.
Money>
