Magazine article American Banker

REPORTER'S NOTEBOOK: On-Line Brokerage Specter Hangs over Fund Confab

Magazine article American Banker

REPORTER'S NOTEBOOK: On-Line Brokerage Specter Hangs over Fund Confab

Article excerpt

WASHINGTON -

While mutual fund executives were busy here last week talking up the success of their industry, they couldn't help noting the brash interloper that is on-line brokerage.

There were whispers on the fringes of the Investment Company Institute's annual meeting that stock trading on-line might be responsible for a recent falloff in fund investing.

But executives also addressed the matter in the public forum.

Peter S. Lynch, who made his name as manager of Fidelity Investment's Magellan Fund from 1977 until 1991, said the public obsession with on-line trading is worrisome.

"People are quitting jobs" to day trade, said Mr. Lynch, vice chairman of Fidelity Management and Research Co. "That's not investing, that's gambling."

But mutual funds are still the best bet for individuals, said John J. Brennan, the chairman and chief executive officer of Vanguard Group of Malvern, Pa., and the chairman of the trade group's board of directors.

During the volatile third quarter, equity funds outperformed individual stocks, Mr. Brennan said.

Approximately 1,600 of 7,000 listed equities lost 50% of their value, while only seven equity mutual funds out of a total of 3,000 funds showed similar losses, Mr. Brennan said.

For those looking for greener pastures overseas, Bridget A. Macaskill, the president and chief executive of OppenheimerFunds, sounded an iconoclastic note during a panel discussion.

Given that fund companies have a limited amount of money to invest in developing new markets, "the arguments in favor of investing in this country are pretty strong," she said. …

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