SEC launches first test of Web mutual fund analyzer

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From Times staff writer Walter Hamilton:

It may get a little easier for mutual-fund buyers to sift through the thousands of offerings out there.

The Securities and Exchange Commission is proposing that fund companies electronically ‘tag’ key information such as investment objectives, risks and fees in their fund prospectuses and annual reports. The goal is to help investors zero-in on key information and easily analyze funds side-by-side using standardized data.

A quick spin through a test page on the SEC’s website shows the service is helpful as far as it goes -- but there’s a lot it doesn’t do.

Investors can view basic features of up to three funds at a time. It’s easy, for example, to compare the fees of the Vanguard S&P 500 fund versus the Federated Capital Appreciation fund. (Only a limited number of funds are available in the test phase.)

But the site only goes so far. It lists annual returns for each fund, but doesn’t calculate average annual returns over time or offer comparisons to broad market indexes or general fund categories in the way that, say, Morningstar does.

More than that, the site isn’t a true mutual-fund screener and can’t be used to select funds based on broad criteria such as investment objective or asset size.

The site still is in the works and there is a lot of time for investors to offer the SEC their suggestions: The agency isn’t proposing to require companies to tag reports until Dec. 31, 2009.