Staying On Track With Personal Computers

Mutual funds and personal computers have one thing in common: Both have really come of age within the past decade.

So it’s not surprising that you can find many good PC programs to help you buy, sell and track mutual funds. Several of these software packages are fairly easy to learn, and some sell at reasonable prices.

If you’re thinking about buying a computer, bear in mind that most mutual fund programs are designed to run on IBM or IBM-compatible machines. “There’s a lot more investing software available for IBM by far--probably by a margin of five or six to one,” says Dan Dibartolomeo, an associate director of the Boston Computer Society who specializes in investment software.

And although the recent technology-sharing agreement between IBM and Apple Computer might one day result in programs that can run on any type of personal computer, don’t hold your breath. “It will be a long time before we see any software compatibility” between the machines of the two dominant standard-bearers, says Robert Cullen, a Rancho Cucamonga financial planner and computer editor for Personal Investor magazine.

Before you spend money on any software package, you should first determine what you hope to accomplish with a computer. Cullen says most mutual fund programs specialize in one of the following areas: fundamental research (selecting funds based on past performance and other criteria), technical analysis (deciding whether and when to buy or sell) and portfolio management (keeping track of your holdings, including any tax liabilities).

The fundamental research programs typically contain reams of data on most available funds, focusing not only on performance results but also risk measures, fees, phone numbers and the like. In a sense, they’re not too different from books, directories and other published reports that track mutual funds, with one exception: The software packages allow you to sort funds much more quickly than you could by flipping through hundreds of pages. If you wanted to identify no-load growth funds with a beta of 0.5 or less, for example, you could do so with a few simple commands.

The computer programs might also have fresher data than you could find in printed form, although this depends on how often you request updates. Information is typically sent on floppy disks through the mail, and more frequent updates will cost you more money.

For fundamental research, Dibartolomeo likes a program called the Mutual Fund Directory. “This is an encyclopedic source with an enormous amount of information,” he says. Frederic Shipley, a DePaul University professor and computer specialist for the Chicago-based American Assn. of Individual Investors, recommends a less expensive package called the Rugg & Steele Mutual Fund Selector.

Both programs will probably put you back at least a couple hundred dollars (see table for specifics), which is why Cullen suggests that investors on a shoe-string might want to avoid fundamental software. “The most economical choice would be to get that information from another source,” such as a finance magazine, mutual fund booklet or mutual fund research service available at your local library. He believes that budget-conscious investors are best served by focusing on the technical analysis software packages.

If you’re content to buy funds and hold for the long haul, you don’t need market timing help. But if you’re worried about getting out of harm’s way during serious downdrafts, then a technical analysis program can be useful.

Some of these programs are simple trend-following tools that aim to push you to the sidelines when the market’s direction is lower. One of Cullen’s favorites, Markex, fits this bill. “It’s a simple program that tells you whether to stay in or get out of equity funds.” He also recommends a more expensive and comprehensive timing service called Investor’s FastTrack. It displays price charts for the funds you choose and tracks various technical signals, including different types of moving averages.

Dibartolomeo and Shipley agree on a technical analysis program called Fund Master TC, and Shipley adds the less expensive Mutual Fund Investor to the recommendation list. However, they both point to limits that may make market timing inappropriate for many people. These drawbacks include transaction costs, possible tax consequences and the basic difficulty of timing trades so that you’re typically buying in at lower prices than you sell at.

“In general, I would discourage market timing because most people aren’t very good at it,” Dibartolomeo says. “But if you’re going to do it, mutual funds are a better way to do so than with stocks or other individual securities.”

In the area of portfolio management, you probably don’t need a package that specifically tracks mutual funds. That’s because general personal finance programs such as Managing Your Money can handle this chore, Shipley says. So can business spreadsheets such as Lotus 1-2-3. Just make sure that the program you choose can tabulate mutual fund dividend reinvestments, he says. Dibartolomeo recommends a product called Pulse, which he considers especially appropriate for tracking mutual fund holdings.

If you haven’t purchased a computer, get one that’s sufficiently powerful to run most popular finance programs--particularly PCs equipped with a 286 microchip or better. “Because the costs of IBM-type computers have compressed so much, there’s no real benefit to buy a bottom-of-the-line machine,” Dibartolomeo says. Also consider getting a color monitor, a good-quality printer and a modem to receive timely mutual fund data over the phone lines.

Programmed for Profits Here’s more information on the mutual fund-oriented software packages discussed in the accompanying article. Some firms offer a free demonstration disk, a lower-cost trial version or a money-back guarantee. Before ordering, make sure your computer can run these programs, all of which operate on the IBM standard. Prices don’t necessarily include sales tax or shipping and handling.

Fund Master TC, Time Trend Software, 337 Boston Road, Billerica, Mass. 01821; (508) 663-3330; $289 ($99 special through Sept. 1).

Investor’s FastTrack, P.O. Box 77577, Baton Rouge, La. 70879; (800) 749-1348. Cost for program and 30-day trial is $19.95. Subscribers then pay a $60 start-up fee and $30 a month (other pricing plans also available).

Managing Your Money, MECA Software, P.O. Box 907, Westport, Conn. 06881; (203) 256-5000; $219.98.

Markex, 3426 Washington Blvd., Suite 206, Arlington, Va. 22201; (800) 334-7940; $89.95.

Mutual Fund Directory, J&J; Financial, 9311 San Pedro, Suite 510, San Antonio, Tex. 78216; (512) 349-2181; $800 for monthly updates (other pricing plans available).

Mutual Fund Investor, American River Software, 1523 Kingsford Drive, Carmichael, Calif. 95608; (916) 483-1600; $69.95.

Pulse, Equis International, P.O. Box 26743, Salt Lake City, Utah 84126; (801) 974-5115; $195.

Rugg & Steele Mutual Fund Selector, Rugg & Steele Inc., 6433 Topanga Canyon Blvd., Suite 108, Canoga Park, Calif. 91303; (818) 340-0179 or (800) 237-8400, Ext. 678; quarterly updates for either stock or bond funds cost $199, or $299 for both (other pricing plans available).