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MAY 23, 2005
Edited by Toddi Gutner MUTUAL FUNDS Do Those Five-Star Funds Really Shine? Thanks in part to the popularity of its one-to-five-star mutual-fund ratings, Morningstar (MORN ) went public on May 2 in a deal valuing the company at more than $700 million. Now, new research is questioning the value of those ratings. Finance professor Matthew Morey at Pace University reviewed the performance of diversified U.S. equity funds in the three years before and after they first received the coveted five stars. Once the funds are adjusted for risk, they outperformed the Standard & Poor's 500 (MHP )-stock index on average by 0.36% a month in the three years before they earned top honors and trailed by 0.41% a month afterward. Why the falloff in performance? One reason, says Morey, is that money suddenly pouring into the five-star funds overwhelms the manager's ability to invest it. "People think these stars are like the ratings of a movie," he adds. "But a mutual fund isn't the same, and it doesn't maintain its quality." Morningstar, which revised its ratings criteria two years ago, says its own study shows slightly better performance for five-star funds since the changes. It also warns investors not to invest in mutual funds solely by the stars. By Aaron Pressman TRAVEL They Hunt For You Tired of scouring the Web sites of hotel chains, airlines, and travel agencies? A growing number of travel search engines will do much of the hunting for you. They can't sell you a ticket or book you a room, but they will deliver you to the company that provides the listing. The latest entrant is Kayak.com, launched in February. Mobissimo.com started up last November, joining old-timer SideStep.com. Yahoo! is getting into the business, too, and has released a beta version of its site, Farechase.com. Unlike the Big Three online agencies (Expedia, Orbitz, and Travelocity), some engines can capture the fares of discount airlines such as JetBlue and European travel sites such as Opodo. But except for SideStep, which has a partnership with Orbitz, they generally don't have access to the Big Three. The engines vary in their suppliers, so it's worth checking more than one. For instance, in a search for a Chicago hotel, Sidestep pointed to hotels.com, which offered only a standard room for the Fairmont Chicago. Kayak took the user directly to the hotel's Web site, which listed a choice of several rooms. By Susan Garland   TIME OFF An Exotic Garden Next time you're in Orlando you might want to check out another magical kingdom: Harry P. Leu Gardens. Not far from Disney World (DIS ), on the banks of Lake Rowena, is a 50-acre botanical wonderland that was once the estate of late industrialist Leu. There are formal, tropical, herb, rose, and butterfly gardens, plus countless exotic plants that Leu collected on his world travels. Admission is $5 for adults, $1 for school-aged children, and parking is free. Guided tours of the gardens as well as Leu's house cost $7 and require a reservation (407 246-3621). By Kate Murphy FASHION A Secure Shirt In July, English shirtmaker Thomas Pink will launch The Traveller, a men's shirt in luxe Egyptian cotton. The fabric is treated to resist creasing. A hidden chest pocket is passport-sized. Inside the cuff, there's a pocket to stash credit cards or cash. The shirt comes in a button-collar/button-cuff model in solid pink, white, or Bengal-blue stripe. A dressier double-cuff, soft-collar version comes in blue or white ($140, only at Pink's Madison Ave. store in New York (212 838-1928). By Christine Summerson
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