Mutual Funds Maintain Corporate Integrity

Physician's Money Digest, October31 2003, Volume 10, Issue 20

If you are looking for corporate integrity,check out mutual funds. Inour lifetime, we have seen majorscandals of savings and loans, the nation'slargest brokerage firms, the life insuranceindustry, religious organizations, and bigbusinesses. But this is not true of mutualfunds. That's because the people whomanage the funds, the financial advisorswho market the funds, and those of uswho own the funds are sitting on thesame side of the table. We all want thesame thing—good performance. Followingis a list of the other advantages ofinvesting in mutual funds:

• Experts utilized. The money of smallinvestors gets the same managementexpertise as investors with big bucks.Portfolio managers are aided and abettedby teams of analysts—highly educated,brilliant, and focused professionalsspecializing in different industries. Theirresearch is funneled to the portfoliomanager who makes the final decision ofwhat companies to buy and sell.

• In-depth research. Not every analystcan find each skeleton in a company'scloset, but overall, an analyst's objectivity,ability to ask penetrating questions,and knowledge of their industry gives alayer of protection to fund shareholdersthat is not readily available to an individualinvestor.

• Well diversified. Federal regulationsmandate that funds cannot have morethan 5% ownership of any 1 company.Because the money is spread over somany companies in 1 fund, if a companypulls an Enron and collapses, investorlosses are minimal.

• Maintained clout. Because of allthe money they have invested in corporateAmerica, shareholders reap the benefits.Case in point: Funds are leading theway to restoring dividend yields.

• Lack of corporate scandals. Mutualfunds have not experienced corporatescandals because they do not have a con-flict of interest. The portfolio manager, theanalyst, the mutual fund marketer, andthe consumer all benefit if the fund doeswell. I've never talked to a portfolio manager,an analyst, or a mutual fund wholesalerwho did not have most of their personalmoney invested in their own funds.

Mutual funds are the answer to thelack of corporate ethics. A physician-investorwho thinks they can outperformmutual funds by trading their own stockportfolio is like thinking the Gretna, Neb,football team can beat the DenverBroncos. Today's investors need a mutualfund on their side to sort through corporateAmerica's misinformation.

Cella Quinn is president andfounder of Cella Quinn InvestmentServices, an Omaha, Neb–based financial planning firm thatspecializes in helping clients buildnet worth through mutual funds.She welcomes questions or comments at 800-772-1160 or cellaq@aol.com. Securities offeredthrough Advantage Capital Corp, a registered broker/dealer, member NASD/SIPC.