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Show The Park Record D Section D Thursday, August 3, 1995 Pajje D3 Matching Should investors strive for mediocrity? Proponents of index mutual funds think so, and they point to the strong performance of index funds for the first few months of 1995 as evidence. FINANCIAL LANNNG ERSPECTIVES Index funds generally match the performance of a specific market index by buying all, or a representative portion, of the securities of that index. This passive approach, used by only about 100 mutual funds, contrasts with the many more actively managed funds that try to sort out the winners from the losers according to the fund's specific investing style (the best of the fast-growing fast-growing small companies, for example). The vast majority of index funds follow the S&P 500 Index, which reflects predominately large-company large-company stocks in America. Large company stocks have done well so State forester urges summer wildfire State Forester Art DuFault is concerned with both the good news and the bad news regarding Utah's potential hazard for summer wildfires. According to DuFault. "The good news is that Utah's late spring and record rainfall have shortened the fire season. The bad news is that despite above-average precipitation, much of Utah's vegetation has not yet recovered DSD 5 LEINFELDER in in employee owned . Ceotechnical Engineering Sjfi Materials Engineering and JBjfgJ.;. nwonrnerital .Science andMringV- water Resource tngmeenngr ' Serving Utah for over 1S years. Where do you want to go? : We can get you there. ONLINE RESERVATIONS "Let us show you the world" 1-800-270-7469 (SHOW) 1830 Homestake Rd. bid. 4 Park City, UT 84060 tel 645-7101 fax 645-7130 RIGHT ANGLE PICTURE FRAMIN6 Look for us in our new ' spot at 1240 Iron Horse Drive (across from Lost Sock Laundry) 649-3640 the market with index funds far this year, and consequently so have most index funds. But there arc index funds that follow a dozen other benchmarks, including the Wilshire 5000 (virtually all U.S. stocks), Morgan Stanley's Europe, Australia, and Far East (1,000 international stocks), and the Lehman Brothers Aggregate Bond Index (U.S. government securities, corporate bonds, and mortgage-backed securities). Index funds have been around for 20 years, and have long been popular with institutional investors. But they haven't caught on with individual investors until recently, and many investors still avoid them. Why? Because isn't the idea to beat the market? Why invest in a fund that is designed to do no better than the market? Why strive for mediocrity? Proponents of index funds say investors should consider adding them to their portfolio for several reasons. Few actively managed funds outperform the market over the long run. Study after study shows the S&P 500 outperforming 80 percent or more of the actively managed diversified stock funds. from the previous eight years of drought." As the hot summer weather continues, trees, grasses and other fuel sources will dry out and could result in a serious fuel loading situation. In anticipation of the current fire season, personnel from the Division of Sovereign Lands and Forestry have completed several advanced training sessions designed to hone ! mi compamr S Off nbles fib V fresh Hummus, Oriental Chicken Salad, Turkey Quesadilla, Grilled Portabella Mushroom and Eggplant Sandwich on Focaccia, plus a variety of bw-fat, no-fat or vegetarian options WTH A T DFFD VAnFVS W VFR I AKV I ODCF. MM McHenry's is open Plenty of Free Parking. For information, call 645-6724. Because index funds are essentially passive funds that don't spend a lot of time and manpower trying to pick winners, their management fees generally are among the lowest of all mutual funds. Annual expense ratios average around 0.45 percent for S&P 500 index funds (compared with 1.4 percent for managed funds), and some run as low as 0. 1 5 percent. Low fees mean you get to keep more of the income and profits. Because funds don't buy and sell a lot of securities, they don't spend much money in brokerage fees. Low portfolio turnover (typically 10 percent of less a year) also means less realized capital gainslosses (profitslosses from the sale of securities) compared with a fund that turns over 80 percent to 100 percent of its portfolio in a year. That means lower tax costs for the investor. Index fund investors know they will at least track the market, and won't have to worry whether the fund is doing better or worse than the market. However, that doesn't mean all index funds are alike. Some do better than others in their skills in fire management activities. The Flame-n-Gos, a squad of inmate firefighters coordinated through the division, recently attended a week of valuable training which included basic fire behav ior, use of water and hand tools, risk management and safety-oriented Send fill out subscription information and send with a check to: Park City Lodestar P.O. Box 738 PARK CITY, UT 84060 the Beaten Path. AtMcHenryS we cater to mountain of spectacular trails, and anyone healthy, satisfying dining on our scenic McHenry's favorites including Parmesan Wed. thru Sun. & Holidays. tracking the index, and some funds have exceptionally high expenses (nearly 2 percent) an up-front sales charges that eat away at long-term returns. While index funds have their virtues, investors generally shouldn't rely solely on them, say Certified Financial Planner professionals. For one thing, actively managed funds, such as small company or sector funds, will outperform index funds during a given time. Also, most index funds focus on the stocks of the S&P 500, while a well-balanced portfolio typically includes other types of investments, such as bonds, cash, and real estate, depending on the goals of the investor. Also, the S&P 500 Completely ignores the global stock market. This column is produced by the Institute of Certified Financial Planners, a national association representing the top financial planners in the country, and is provided by Daniel Smith, CFP, a local member and president of the Utah Society of the 1CFP. For a list of CFP professionals in Your urea, call toll free 1-X00-2S2-PLAN (7526). awareness strategies for fire containment. Both current and newly hired district fire wardens from Utah's 29 counties have also completed upper-level upper-level training in communications, intermediate fire behavior, interface strategies and interagency coordination. Park City bikers, hikers and scenic riders, from who wants to escape the city heat and deck. Our summer menu features Baked Pita Chip: This Month We Install Our Installation Offer. This month only, Hit Closet Fadory will instill ;iu ateolutky free of diarge. I Iere's how ii works: Our certified design specialist conies to vour hme '(:! ,:.! -closet design and all die wonderful accessories only u Then measurements are taken. A free installation appintnieni h made. And when we're done, you'll I v left with a xifeah lean perfectly terrific new closet! Gill for your free in-home consultation now. I Wore air it lei to install is removed. rrcc uiMauauuii, jmmicu lune uiuy: This entitles the bearer to a free taalilion of a custom closet by The Closet Facto limit one installation per household May not be used in conjunction with any other promotion or ifrr Call for free in-home coasultatioa Park City 801-645-5356 ToU-Frec 800-505-7666 (Fur Hill Ro-iJcnlM to a Friend A Complete, Guide , LODESTAR Creatively You to the Entertainment, Sports, People and of Park Please Send: 1 year subscription (2 issues) $12.00 2 year subscription (4 issues) $20.00 Beginning with: Summer '94 Issue Gift Card Winter '94-'95 Issue From Name Address. City State Deer Valleys enjoy 1 VRE Ii I fcl I I M mm' ' I 111 If '' ' Informative Introduces History, Personality City. Zip I - , i i 4 - f ' ' ' ' tUmgr- 7 w .. 144 ji - m mmtmimtmmm wmmm i |
