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"These individuals believed that Web Hubbell had done nothing wrong and was involved essentially in an internal billing dispute with his former law partners." -- White House spokesman Lanny Davis, on job help Clinton aides gave Hubbell, who was mired in the Whitewater probeEDITED BY LARRY LIGHTReturn to top

THE INDEX MANAGERS' DIRTY LITTLE SECRET

ON THE SURFACE, ALL STOCK index funds should have identical total returns. But they don't because their expenses vary. So, go for the fund with the lowest expenses (table).

For portfolio managers, index funds are almost no-brainers. They don't need a corps of experts to vet a stock, deciding whether to invest. They merely buy shares in every company in an index--the most popular being the Standard & Poor's 500--or a portion of the stocks, to mirror the overall index. For these so-called "passive funds," expense ratios (the percent of costs to assets) generally range from 0.2% to 0.6%. The average for actively managed funds is 1.3%.

Since many index funds only began in the past few years, the high-cost ones usually justify themselves by saying there was a significant startup expense. Prudential Securities says its S&P fund started at 0.6% in 1992. But now that assets are at $250 million, it lowered that to 0.5.

Also, some index managers admit privately that high expenses exist because the funds feel they can get away with it. "Investors usually don't think to compare our expenses," says a manager of a high-expense fund. "They think we're all the same."EDITED BY LARRY LIGHTReturn to top

TABLE

How S&P 500 Index Funds Vary

EXPENSES AS TOTAL

% OF ASSETS RETURN

CALIFORNIA INVESTMENT 0.20% 22.3%

VANGUARD 0.20 22.3

BT INVESTMENT EQUITY 0.25 22.2

FIDELITY MARKET 0.45 21.9

DREYFUS 0.50 21.8

PRUDENTIAL STOCK INDEX Z 0.50 21.5

12 Months through Mar. 27, 1997

DATA: MORNINGSTAR INC.

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MILK MUSTACHES DON'T TICKLE FOLKS

ALL THOSE MUSTACHES AREN'T doing much for milk consumption. Despite two high-profile ad campaigns costing $300 million, the average American's milk consumption continues to drop. Last year marked the seventh straight annual decline. It's part of a 25-year trend in which per capita sales fell by 15%, to just over 24 gallons.

Milk processors are in the midst of a four-year campaign by Bozell Worldwide featuring milk-mustached celebrities--most recently rockers Alex and Eddie Van Halen, with Alex doing a total-immersion version. Dairy farmers are running their own offbeat ads, entitled "Got Milk?"

The industry says that at least the decline has slowed. In 1996, the campaign's second year, the drop was 0.29%, an improvement over 1995's 0.86% slump. Trouble is, the dip in 1994, before the ads even started, was 0.24%, almost the same as 1996's. Fixing the problem, says Kurt Graetzer, executive director of the Milk Processor Education Program, will "take some time." But there is a drop or two of good news, though: Skim milk (one-sixth of the market) was up 5% last year.By David Leonhardt EDITED BY LARRY LIGHTReturn to top


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