Bloomberg Anywhere Remote Login Bloomberg Terminal Demo Request


Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world.


Financial Products

Enterprise Products


Customer Support

  • Americas

    +1 212 318 2000

  • Europe, Middle East, & Africa

    +44 20 7330 7500

  • Asia Pacific

    +65 6212 1000


Industry Products

Media Services

Follow Us

Bloomberg Customers

Mutual Funds: Green Eggs and Ham?

Posted by: Lauren Young on January 19, 2006

Every week I make a regular appearance on CN8, a station for Comcast cable subscribers that reaches much of the East Coast. Since it is a morning show, the mood is light and breezy. Today’s topic was picking mutual funds.

To play off my recent BusinessWeek Mutual Fund Scoreboard Update (“Funds, the Easiest Way to Find The Best”), the CN8 producer came up with the kitschy idea of showing viewers how a mutual fund portfolio is constructed like a balanced breakfast. The example she picked was American Funds AmCap Fund.

Thus, here is how I described some of the fund’s top holdings on not-exactly national television:


Target: Eggs

Best Buy: Bacon

Capital One: Toast

Microsoft: Juice

Google: Coffee

(Since the Target logo looks like an egg, it makes perfect sense to let Target play the role of the eggs. But I would have assigned Google to the role of juice, and put Microsoft in the coffee slot.)

Incidentally, the producer also decided that the dinner menu should feature a tech fund. Her menu pick was T. Rowe Price Global Technology, and her casting included:

Dell: Chicken

Intel: String beans

Texas Instruments: Rice Pilaf

Qualcomm: Dinner roll

Samsung: Milk

Okay, so it's a little hokey--does anyone above the age of 5 actually drink milk at dinnertime? And how would Michael Dell respond to being called a chicken? But you've got to give my producer some credit for her creativity.

Kitsch and hookiness aside, the meat and potatoes part of picking funds is this: When buying a mutual fund, consider performance, expenses and manager experience.

1) Performance: You hear over and over again that past performance is no guarantee of future results. That’s true, but still track records matter. You want to find a mutual fund that’s done a good job of navigating the markets. A fund doesn’t have to have chart-topping performance, but, ideally, it should be above average.

2) Expenses: You pay a percentage of the fund’s assets to own the fund which is known as the expense ratio. The average mutual fund has an expense ratio of 1.4%, which means that for every $1,000 you invest, you pay $14.00 in expenses. I'm a sucker for a good deal, so it is always good to find a mutual fund with low expenses.

3) Experience of the fund manager: In mutual fund industry lingo, this is known as manager tenure. You want to see how long the manager has been running the fund, and what kind of experience they have.

You can get a lot of this information from BusinessWeek's Mutual Fund Scoreboard.. I also like Morningstar for mutual fund research.

Bon appetit!

Reader Comments


January 21, 2006 10:08 PM

Seems like a good analogy. I would probably add some international flavor to the main course: Hakka noodles from China; Burrito and Salsa from Latin America and spice it up with some Indian curry. In other words make sure we have some exposure to Latin American and South East Asian markets.


October 3, 2006 3:00 PM

You may want to check this new digest focussed on Retirement Investment, Mutual funds, 401K issues.

Post a comment



Bloomberg Businessweek’s Ben Steverman focuses on the latest moves in financial markets and emerging trends in stocks, bonds, and funds, always with an eye toward giving readers a better understanding of the sometimes confusing and often chaotic world of money. Standard & Poor’s senior index analyst Howard Silverblatt will also provide his take on companies’ finances and the markets. Voted one of the “Top 100 Finance Blogs” in 2007.

BW Mall - Sponsored Links

Buy a link now!