Yes, Funds Still Matter

Stocks may sound sexier, but mutual funds can deliver plenty of sizzle.

I love mutual funds. Investing in them may not be as sexy as trading individual stocks or clicking your way to an online broker. But there is no better deal in the financial services world than funds. For a modest fee (usually), you get to hire a seasoned professional to do all that research and trading and clicking for you. Along with the expertise, you’re buying yourself some free time — perhaps the most precious commodity in our jam-packed 21st-century lives.

And funds can be plenty exciting. Just look at all-star fund manager David Alger. At Spectra fund, he delivered 971% for his investors during the 1990s. Chip Morris did even better at T. Rowe Price Science & Technology, returning 1,089%. There’s nothing boring about numbers like those.

Of course, not all funds are great investments. You have to be mindful of costs and fees and management changes — not to mention the risks some managers take. This issue of MONEY provides a slew of information to help you sort through the choices. The in-depth statistical tables that begin on page 63 can provide a reference for comparison and assessment, both for funds you own and for those you may be considering. In addition, on page 116 we’ve identified the best managers of the past decade — including Alger, Morris and our cover subject, Tom Marsico — who we believe are poised to deliver again for shareholders in the next 10 years. We’ve also examined the latest innovation in funds, exchange-traded index funds; as writer Pat Regnier reports on page 126, they offer new advantages for investors who understand how to use them. And for those intrigued by the world of rapid-trading hedge funds, on page 134 senior editor William Green and writer Joan Caplin offer a penetrating look at the king of extreme investing, Jeff Vinik, formerly manager of Fidelity Magellan.

None of this coverage would be possible without our terrific team of in-house mutual fund specialists, several of whom are pictured on this page. In the center of the photos, appropriately, is senior columnist Jason Zweig. This month he finds lessons for fund investors in the random outcomes of experts’ market forecasts during the past decade. See page 130.

I hope you find it all richly satisfying. As always, I’m eager to hear your reactions and suggestions. Please contact me by mail at MONEY, Time & Life Building, Rockefeller Center, New York, N.Y. 10020 or by e-mail at managing_editor@moneymail.com