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Muriel Siebert & Co.


ASSET MANAGEMENT STOCKS



If milling through the 15,000 plus open-end mutual funds--- and their alphabet of share classes--- leaves you hankering for help when trying to decide which fund to invest in, there's another approach you can take: Consider investing in the stocks of the families that offer mutual funds.

Currently, there are several different publicly traded fund families, from Alliance Capital Management to Waddell & Reed Financial, that offer investors the opportunity to purchase shares of their asset management companies.

Thanks to the bull market during the last 15 years of the past century, some of these financial stocks have had bountiful runs. And for good reason---asset management companies collect fees for managing the money that folks invest in mutual funds and in their private and institutional client accounts. Also, they typically have high margin profits. But investing in any of them isn't risk free. As with any stock, or mutual fund investment, returns aren't guaranteed. Plus the performance of these sector specific companies can be volatile.

That being said, purchasing shares in any of the publicly traded fund families is as easy as calling or visiting your broker. Or, going online and using one of the nearly 250 online brokerage services offered there.

BuyandHold, Inc. is a relative newcomer to the online brokerage service cadre. Started thirteen months ago, (Nov. 1999), by three young men with a background in shareholder services, the company now boasts 170,000 customer accounts. As a result, at the end of the third quarter 2000, it ranked 12th largest in online brokerage companies. One of the reasons for its popularity is its fee structure: The cost for buying--or selling-- shares of a stock is $2.99. Round trip, that's $5.98.

Phyllis Berman is president of BuyandHold Securities Corp.. I spoke with her about the online brokerage service and here's part of that conversation:

Q: What is BuyandHold Securities Corporation?

Berman: It's a wholly owned subsidiary of BuyandHold Inc. and is a dollar-based Internet online brokerage service. The advantage that it offers customers is that we give them the opportunity to invest in dollars, as opposed to number of shares. And, they can invest small increments of money.

Q: How small?

Berman: $20. That's the minimum investment whether you are buying a stock or investing in our systematic purchase program, called EZVest.

Q: And the maximum commission costs?

Berman: We have two different pricing programs. A customer can choose to pay per trade or per month.

If they pay per month, they are going to pay $9.99 every month and they'll be able to buy and sell stocks as frequently as they wish. Or, they can pay per trade, which will be $2.99. If they transact more than one trade in any one of our trading windows, the second trade is $1.99. Our EZVest program is also $1.99 per month.

Q: What's a "trading window"?.

Berman: We go to market twice a day, at 10:30 and 2.:30 eastern standard time. So, this isn't really place for active day traders. Like our name, it's a place for investors practicing a buy-and-hold investment strategy.

Q: How do you make any money trading only twice a day and with such low commissions?

Berman: Well, let's review the fees. On our pay per month, the charge is $9.99 month in and month out.Or, if you choose pay per trade, the charge is $2.99 per trade, and $1.99 on a trade in the same window. There also is an inactivity fee of $2.99 per month, that begins 90 days after you're first trade if you do no business whatsoever on any given month.

Then, because we aggregate our trades and only go to market twice a day, our commission costs are lower. So it's a volume-based business and one in which we can pass the savings on to our customers.

Q: Any similarity between a buy-and-hold investment strategy and mutual fund investing?

Berman: Many mutual fund investors are dollar-based investors. That is, they are used to investing a fixed dollar amount on a regular basis, into their fund's systematic purchase program reinvesting all dividends.

If a mutual fund investor is comfortable with that, BuyandHold is exactly the place they want to come to make their purchases of individual stocks because it's the same drill.

Here's a list of publicly traded asset management companies:

NAME OF FUND FAMILYSYMBOL
Affiliated ManagementAMG
Alliance CapitalAC
AmvescapAVZ
BlackrockBLK
Eaton VanceEV
Federated InvestorsFII
Franklin ResourcesBEN
GabelliGBC
John NuveenJNC
Legg MasonLM
Neuberger BermanNEU
Stillwell Financial Services (Janus)SV
T.Rowe PriceTROW
Waddell & Reed FinancialWDR

(Source: Alliance Capital and Morningstar)

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