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Show ~TheSalt Lake Tribune BUSINESS_ Sunday,December 24, 2000 Ranking Year’s Best Funds Is | Bad Way to Evaluate Investments ‘ | Inthe world of US.investing, they are aboutto hand out the mutual-fundversionofcollege football’s Heisman Trophy. The momentthedaily net asset values per share are tallied on Dec.31,financial advisers and the press will start acclaiming the No. 1 performerfor the year in each category offunds. ' [have no wishto slight this achievement. Like Chris Weinke, the Florida State quarterback who jon the Heisman this season,the fund honorees will have prevailed againstfierce competition in a very tough game. Evenso, investors should neverbe dazzled by fund rankings or think ofthem asan all-purpose guide to choosing where to put their money. Chasing thelatest hot fundis a notorious merry-goroundride to nowhere. While some Heisman recipients go onto glory in professional football, others turn outto be medio- cre or worse. Besides,if you fill your team with Heisman winners, you geta roster of quarterbacks and running backs with hardly anybody who canblock,tackle or $naptheball. “You don’t need to be in the No. i fund,” says adviser and money managerEric Kobren in his news- letter FundsNet Insight, published BarConsiders Opening Doors For Lawyers @ Continued from E-1 other professionals who don’t share the sameobligations? Prohibitions on MDPs, with the exception of nonprofit legal. services and corporate in-house legal departments, date back to American Bar Association (ABA) canons adopted in 1928. The rules, accord- ing to a state bar task force report, were supported as “necessary protection for lawyers’ professional of j although some bar leaders at the time acknowledged “their motiva- tion was primarily to protect lawyers’ livelihood” from a growing numberoftitle, insurance, trust, indemnity and other corporations offering legal services. The issue returned in force in 1998 when the ABAestablished a Commission on Multidisciplinary Practice to consider the rules in context ofnew developments in the legal services market. Ultimately, more than a dozen state bars and the ABA rejected MDP recommendations. Critics contend the arrangements are inconsistent with the core values of the legal profession. Others are reluctant to change a sy:‘em that does not appear broken and fear MDPs would open a floodgate of MUTUAL FUNDS FUNDS cording to Bloomberg data, witha 167 percentgain. In 2000,it has plummeted to the bottom rung of the ladder with a 52 percentloss. Evenin less extreme circumstances,a fund inevitably undergoes changes.Its success is likely to attract scads of new money from investors, and the crew that did so well driving a speedboat nowis piloting a freighter instead. As marketconditions shift, the manager may havereason in the new year tosell stocks and thus cash in paper gains amassed before you clambered aboard. This brings youa capital-gains distribution thatgoes straight into your income-tax accounts. CHET CURRIER inbetteroffsearching Wellesley HillsMass. “You are oyropastrperformance,”sas outsolid Ed Rosenbaum, directorofrefunds that match your own investmentstyle and tolerance:for risk, search atthe fund-tracking firm LipperInc. in New York.“That's andsticking with them.” Whynotcastyour lot with the fundthatdid better than all others Ofits ilk overthe last year? Letme countthe perils. yet anotherreasonnotto buy last year’s hotsector.” Whenever I arguethis way, it sounds as if I think all good fund performance is a fluke. Notso. helped a managerexcel in some volved. The problem arises in dis- ‘The marketconditions that pastperiod will change in the future. Howtheywill be different is There is usually luck andskill in- tinguishing thelatter from the former, and using thepast to impossibleto predict,butthat they will be differentis certain. Maybe the managers will adapt projectthe future. “It’s naiveto think you're goingto find the single best money well to these new circumstances, manager,” says Len Brennan, or maybe they won't. Look atany Internetfundthat managing directorof individual investor services atthe invest- has beenin business since the start of 1999. The WWW Internet Fund, for example, ranked in the top 1 percentofall funds in ’99, acurself” Metal Blackburn, task force co-chairmanand an attorney with Blackburn & Stoll in Salt Lake City, said it is possible that MDPs might place lawyers in more frequent ethical dilemmas, such as turning down a well-paying piece of work because it conflicts with the interests of an existing client. Or perhaps a nonlawyer supervisor trying to make a department mentadvisory and management firm Frank Russell Co. in Tacoma, Wash.“That's like finding thesin- gle best stock.” institutions is decreasing,” according to the task force report. The task force said it believes most lawyers, once they understand the market forces, will recognize that MDPsare “nota threat to the legal profession” but an opportunity to accomplish three key objectives: “encourage clients to use lawyers in the performance of traditional legal services; makelegal services more available to a broader cross section of the marketplace; and protect the public by encouraging the performance of legal services by those best qualified to offer those services.” more profitable might try to force issues thatviolate legal ethics. “But the reality we ought toface is that lawyers arealready in[such situations] every day now,” Blackburn said. “And while there's always an exception that makes the newspapers most lawyers handle [the pressures] very effectively every day.” Supporters say a combination of ic, social and i changes are driving the need for MDPs,whichare allowed in many other countries. Financial institutions, insurance companies, accounting firms and others are already quietly bundling legal services and mar- whoraised seriousprotest, the rest fell into one of two groups, Blackburn said. “One is the “I don’t know enough about it yet and 1 want to learn more and then will form an opinion,’” he said. “The keting themselves as “one-stop” other is the, ‘Wow, what took you service providers, accordingto the task force report. And consumers, seeking less expensive alternatives, are turning more frequently to the Internet and access to “selfhelp and‘smart’ legal systems that do notinvolve consultation with a lawyer,” the task force report notes, “As a result of these changes, our role as an integral part ofsociety’s economic, social and justice “By working with nonlawyers in a sanctioned environment, law- yerscan more effectively guard the core valuesofthe legal profession,” the task force said. Blackburn estimates he has met with 700 Utah lawyers about the There is such a thing as persistence ofperformance. Research has shown thatthe bestperforming broadly diversified fund in anygiven year often gets better than average results in the following year. One study,by veteran fundanalyst Sheldon Jacobs, found that from 1975 to 1997, the No. 1 U.S. no-load stock fund in each year averaged a 23 percent return the following year, compared with 15 percentfor the average of all funds. That’s on average, though; there are glaring exceptions like theInternet boom-bust. Trading funds onthis basis also may be a bere mr Ley Soak ine DaeSaiyan es ee are conventional loans 80 percent largest metro ai loan-to-value. Carloans are for 20percent aaé:month, new car. Personalloans are for $3,000 24-month unsecut ;-Mortgages— = oars ot ae Date 30-year 15-year ARM This week 7.25 690 7.08 Lastweek 742 Lastyear 8.08 year issued a 21-page report that unanimously recommends alterations to the state’s Rules of Professional Conduct it says will permit MDPs while maintaining t-aditional client protections. The bar commission is taking comments from lawyers and the public until Jan.10 and will issue a final report after meeting Jan.26.If the commission recommends the changes, a petition will be presented to the Utah Supreme Court, which holds ultimate authority to ide any changes to the Rules of Professional Conduct. “The task force,” Nuffer said, “is recommending that werely on the lawyer to make the decision, and nottry to insulate the lawyer from the pressures, but to say to the lawyer, ‘You have all these constraints still, even if you partner with someone else, and any le- gal decision has to be made in this context, You must keep confidenc- es. You mustnot have conflicts of interest. You must always decide on the basis of what's best for the client,not what's best for the other Prpfessionals or even for ly 15.24 14.73 17.36 15.97 Bank Rate Monitor's sealsmiey the 10 largest banks and S&Ls in the 10 largest metro ar Date MMDA* acca 1-year 2-1/2-year 5-year This week Last week 2.13 2.13 5.21 5.25 5.44 5.46 5.48 5.53 5.75 5.82 Last year 2.07 4.64 497 5.20 5.48 * Money Market Deposit Accounts Wheneveryousee a ranking of Yields on biggest money funds this year’s No.1 funds, consider the information one-dimensional. Does it tell you whatrisks the funds tookto get there? “Large re- Here are the 15 biggest money-market mutual funds individuals with their current seven-day annualized yiel turns overthe past few years have This Last 6 mos. Vanguard MMR/Prime Port Fidelity Cash Reserves 6.32% 6.26% 6.33% 6.24% 6.33% 6.19% Schwab Money Market Fund Schwab Value Advantage MF 5.96% 6.32% 5.96% 6.32% 5.80% 6.19% Merrill Lynch CMA Money Fund 6.06% 6.06% 5.96% Fund (ranked by size) Smith Barney Cash Port/Class A convinced people they were smart, and neighbors whodidn’t invest as aggressively were not as smart,” says Kobren.“This is not only wrong,it’s dangerous.” Chet Currier is a Bloomberg News columnist. He can be reached at ccurrier.@Bloomberg.net. week 6.09% week 6.11% ago 6.00% MorgStan Dean Witter/Active Assets 6.18% 6.19% PaineWebber RMA MF/MM Port 6.08% 6.09% 6.01% Centennial Money Market Trust 6.05% 6.11% 5.95% 6.08% 6.07% 6.03% 6.19% 5.86% 5.66% 6.29% 6.19% 5.86% 5.67% 6.29% 6.09% 5.78% 5.61% 6.15% Evergreen Money Market Fund/CIS 5.61% 5.60% NA. Avg.taxable money fund Tax-free funds 6.00% 3.45% 6.01% 3.23% 5.88% 3.64% DeanWit/Liquid Asset Prudential/Command Money Fund Wells Fargo MMF/Class A Alliance Capital Reserves SSga Money Market Fund/ClassA ‘Sources: bankrate.com and iMoneyNet, Inc. 6.10% Gannett News Service Tax Cuts Give Boost to Canadian Economy Thebars, however, are moving forward on the issue, and are also tackling rules for multijurisdictional practices, another hot national legal issue. “I don’t think the issue is going to go away,” Harris said of MDPs. “Our world is changing whether we like it or not with technology and mobility. And the accounting firms are really pushing theissue. . .. We oughtto try andtake a leadership position rather than let things happen.” proposal. Exceptfor two attorneys ‘THE WALL STREET JOURNAL‘ dollars ($131.29 U.S.). 5 Canada’s" “economy surges thanks to tax cuts, but concerns remain. The economyshot ahead at an annual 4.8 percentrate in the third quarter, double the U.S. pace. Re- cent cuts in income and capitalgains taxes are underpinning the good times, politicians boast. In Ontario, “tax cuts have paid real dividends in terms of a strong economy,” says provincial Finance Minister Ernie Eves, not to mention a one-time “taxpayer dividend”to citizens of 200 Canadian Corporate tax rates are sched- ' uled to drop to 35 percent from 42: percent by 2005, Canada’s finance ‘ department says. Still; the good : times wouldfeelbetter if not for a : chronically weak currency againstthe greenback and the worries ofa ‘ slowdown fueled by the cou uy’s | main trading partner — the United : States. Canada’s auto industry al: Soaee caughtthe sniffles from : Detroi 5 aye of DaimlerChrysler AG’s Canadian operations are ‘aking weeklong shutdownsthis month. so long,’ group.” Bar: officials in Arizona and Colorado, among the first to take pro-MDPstances, said lawyers in Target their groups have had-similar reactions. Both organizations have task forces studying possible rule changes to allow MDPsas long as core valuesare preserved. “The general reaction is one of watchful waiting,” said Dale Har- PROSTATE RELIEF you need Frequent Urination ¢ Straining » Hesitancy These are just a few of the symptomsof a non-cancerousenlarged prostate (BPH) which can now beeasily and safely treated using an advanced non- with surgical process with the PROSTATRON®. Performedbycertified Urologists, this outpatient procedureoffers significant, lastingrelief without surgery and without a long recovery period. ADVANCED For more information call Toll Free: 1-877-364-TUMT (8868) or 801-364-TUMT (8868) URG@MED TECHNOLOGIES. (40.0 FDIC Insured CD’s 12 MONTH FIXED TERM 7.902 Yield Fixed Term! Fixed Yield! NO FEES! Subject to availability $20,000 minimum deposit. Penalty for early withdrawal FDICinsured to $100,000perinstitution. Don't miss this opportunity for attractive yields, call: Salt Lake City Office 5808 South 900 East Suite A (801) 270-9694 TOLL FREE 877) 920-9694 fest side of 9th East North of the Memorial Mortuary Careers. Why advertise in Careers? As an employer, targeting the skilled candidates you need is critical to your firm's Careers 2001is thefirst place qualified success. With Careers, you not only reach professionals will go when lookingfor a job professionals eager for employmentinforCareers 2001is the specialclassified sec- tion designed to help recruiters find the best job candidates Salt Lake hasto offer. change — in fact, 74 percent of adults in mation,. but you also reach Internet-savvy the Salt Lake marketlooking for a new or computer users around the globe because all in-column ads run in the Online Deseret News aretheir preferred advertis- Classifieds as well. ina source.* At NAC we pride ourselves on bruiging businesses and skilled employees With Careers display ads,limited promotogether — and that’s exactly whatyou get tional copy opportunities are available at no additional cost. It's perfect for drawing with Careers 2001. different job say The Salt Lake Tribune and prospects. Editorial: Wednesday, Jan. 17 Don’t wait to reserve your advertising space. The deadline for Careers 2001 is coming Bannered display ads: Tuesday, Jan. 23 upfast. To reserve your ad space,call your Display ads: account executive or one of our recruitment specialists today. Thursday, Jan. 25 Lynn Vredeveld — 237-2742 Judy Dyson — 237-2596 David Elliott — 237-2095 St. George Office 321 North Mall Dr. Suite X-102 TOLL FREE (877) 679-1121 § (435) 627-1121 CORNERSTONE FIMAMCIAL GR the skilled candidates ris, president of the Colorado Bar DEADLINES Utah bar task force that has been studying the issue over the past 966 892 Bank deposit yields requires selling yearly to move your moneyinto the newest standout. “It is a high-risk approach,” says Jacobsin his Guide to Successful No-Load Fund Investing. “Tn twooffour bear market years, the top-rated fund seriously underperformed the averages.” opportunities for unethical non- lawyers to take advantage ofclients and lawyers. The ABA decision, however, was only advisory and has not stopped about 10 states, including Utah, Colorado and Arizona, from pressing forward with studies that could lead to MDPs. Many other state bars have formed MDPstudy groups but have yet to take a stance. “We have an opinion, but it’s nota binding opinion,” said Nancy Slonim,director of national media services for the ABA. “It's often persuasive, but not always.” In Utah and other states, supporters contend the legal profession can accommodate MDPs while preserving core values and lient protections. They argue the cl is essential for lawyers to compete and provide better access to consumers in the changing marketplace. In November, an 11-member 7.21 659 Credit card* 17.09 “Average has changed from fixed rate card to a variable rate card. short-cutto tax purgatory,since it Association. “Some people are enthusiastic, other people are not enthusiastic. Most people are saying, ‘Keepus posted.’” The Colorado and Denver bar associations led the unsuccessful effort before the ABA in July to at least delay a final decision on MDPsuntil more state bars could weigh in ontheissue, Harris said. 7.07 7.68 Car Personal 9.65 15.24 “Source: 1999 NAC/Bekden Associates survey, Salt Lake market area. TheHaltLakeTribune - DeseretNews |
