Sites May Not Offer Much to See

Among the business phenomena that have surged over the last few years, mutual funds and the Internet certainly belong at the top of the list. So it’s hardly surprising that examples of their logical hybrid--mutual fund Web sites--have also mushroomed.

Virtually every major fund family now sponsors an elaborate Web site. Their capabilities vary, but at the minimum, an investor can expect to find a comprehensive listing of all company funds, often grouped by investment objective or fund category (growth equity, municipal bond, international, etc.). Almost all major sites allow visitors to obtain fund prospectuses and applications either by placing a mail order or downloading them directly to their computers.

Many also provide a host of extras, ranging from expert analysis to personal finance advisories to college-cost and retirement-savings calculators.

Janus Funds says it will soon open an investor chat room on its site (https://www.janusfunds.com) that will allow visitors to meet online with other investors. Fidelity (https://www.fidinv.com) offers audio market reports and sector roundups. And many others give investors or other visitors access to the latest end-of-day prices, or net asset values, for their proprietary funds.

Several sites also function as omnibus access points. Networth (https://www.networth.galt.com) is a sort of clearinghouse for information and sites of 16 large fund families. Abridged Morningstar analysis pages for member funds are available to those who take the time to register as Networth users, a free and relatively easy process.

Why the explosion of Web sites? The mutual fund companies say they view the Internet as an indispensable marketing link to current and potential new customers.

“We have a view of the electronic channel as the fourth in our distribution channels, after mail, telephone and in-person” contacts, says Zachary Leonard, vice president for interactive programs at Fidelity.

Recent research demonstrates that many investors are highly intrigued by the possibilities of the Internet. In a survey last year of mutual fund investors, American Century Investments, the mutual fund family that was formed with the merger of Benham and Twentieth Century funds, found that 18% of all fund investors have and use Internet access.

These investors’ most common use of the Net was to check fund share prices (43% did so), or read or download fund prospectuses (37%). Only 13% said they used their funds’ Web sites to check their account balances, presumably because few sites actually offer that capability.

Only 10% said they would use a Web site to buy or sell shares, a figure the survey takers ascribed to fears about the security of financial transactions on the Internet. It’s interesting to note that that figure doubled among respondents who had already used the Net for a share transaction, hinting that familiarity may breed confidence.

The survey does suggest that investors’ use of the Internet will grow sharply.

“There’s a growing percentage of online investors who are looking for the opportunity to save the flow of paper on their desks,” said Mary Witwer, director of electronic commerce at American Century.

Still, investors unfamiliar with the Internet should be aware that it is not necessarily the information paradise its promoters make it out to be. Even a fully wired investor in search of a particular nugget of information--say, the 1996 percentage gain for a given fund--should consider whether it’s easier to look it up in the nearest newspaper or personal finance magazine. Checking the Web entails turning on the computer, accessing the Web, finding the site, waiting for it to load, and navigating about until the data come to the screen.

Similarly, computing one’s account balance can often be done through personal finance programs, such as Quicken and Microsoft Money, which are faster and immune to the network logjams of the Web.

Individual investors may discover in other ways that despite the claims of convenience, comprehensiveness and informativeness, there is a large gap between the Internet’s powerful technological capabilities and its meager, commerce-driven reality.

For one thing, investors will find almost no information on their funds’ Web sites that isn’t already available from other sources, including advertising, company mailings and other public information.

Although the Internet theoretically affords site sponsors the technological capacity to post up-to-the-minute data--including daily updates on fund performance and portfolio changes--few if any fund companies exploit that opportunity.

A user checking in late January the year-to-date percentage gain in Fidelity’s giant Magellan Fund got nothing more recent than figures updated to Dec. 31.

As for portfolios, fund companies tend to post only such readily available data as their funds’ top 10 holdings and asset allocations by industrial sector--usually dating to the most recent annual or semiannual report, which can be many months old.

Web site managers say regulatory rules and company policies govern the information they can post to their Web sites.

“Everything we do on the Web site goes through legal and compliance review,” says Witwer of American Century.

Fidelity’s Leonard adds that his company is wary of affording Web users access to much more hard information than it distributes by mail or telephone, lest legal questions arise over the disparity.

“We’re quite sensitive to the potential disparities between Web and non-Web customers,” he says. “Everything we post can be gotten to by another, non-Web method.”

Moreover, many fund managers are concerned that giving the outside world real-time knowledge of their portfolio moves would encourage customers to second-guess their decisions, while complicating the funds’ ability to quietly build or reduce investment positions.

Accordingly, much of extra information the funds post to their Web sites is not hard data, but generalized advice and investment pointers.

Dreyfus’ Web site (https://www.dreyfus.com), for one, contains a section of advisory essays on what the company calls “life events”--ranging from buying a car to “financial planning during a terminal illness.”

The full roster of essays is open only to clients of Dreyfus’ new Lion Account, an omnibus bank/investment/bill-paying account whose fees are not especially competitive. Casual browsers or even non-Lion Account investors in Dreyfus funds are limited to viewing one essay a month, selected by the company.

The most recent open essay was on “welcoming the birth of a child.” Most of the advice was necessarily generic and some of it was intuitive (“check your medical insurance”), but much of it was helpful, including the discussion of the pitfalls of putting too much money irrevocably in your child’s name. Best of all, the material was devoid of pitches for specific Dreyfus products.

*

Michael A. Hiltzik can be reached at michael.hiltzik@latimes.com