What the experts say

Mutual fund mayhem; Ditching your dogs; Sweet music, stable value

Mutual fund mayhem

The same financial crisis that ravaged your portfolio is shaking up the mutual fund industry, said Penelope Wang in Money. Several industry giants, including Fidelity and Oppenheimer, have cut staff in the past year, and more than 1,000 smaller funds have been liquidated or merged. Don’t let this turmoil “throw a wrench in your portfolio,” however. If your fund’s been ­gobbled up by another, scrutinize the new prospectus for changes in investment style. Also look for changes if the fund’s manager “gets the boot,” as many have or will. Finally, pay close attention to fees; “Morningstar predicts fees for stock funds are likely to rise.” If you paid higher-than-average fees previously, this is a good time to look for lower ones. If your fees are still reasonable, wait it out. “Chances are, expenses will fall when the market recovers.”

Ditching your dogs

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Now’s the time to unload your losers, said Matt Kranz in USA Today. Sure, your shares in AIG or Freddie Mac could make a comeback, and right now the loss you’d take on selling such stocks could be well more than the proceeds. But “remember, when you sell a nearly worthless stock in a taxable account, you can use the tax loss to offset capital gains and up to $3,000 of ordinary income.” You can even carry additional losses forward to future tax years. When you do sell, try to incur as few transaction costs as possible. Zecco, Bank of America, and Wells Fargo all let select ­brokerage clients sell worthless shares without a fee. Meanwhile, online brokers such as Sharebuilder.com offer supercheap trades. Just double-check to be sure that there isn’t an extra fee for penny stocks.

Sweet music, stable value

Violins made by the Stradivari or Amati families in 17th-century Italy aren’t just coveted musical instruments, said Jeremy Caplan in Time. They’re also excellent investments. Since 1850, the value of professional-quality violins has increased by an average of 3 percent a year after inflation, according to Brandeis University economist Kathryn Graddy. That’s an extremely stable return. The hitch: Violins made by the Italian masters command seven-figure price tags in the first place, and aren’t easy to acquire. Some investors are considering pooling resources. “Florian Leonhard, a London-based violin expert and dealer, is gathering more than $50 million for the Fine Violins Fund, aiming to buy as many as 50.” Until then, don’t bother investing in a no-name violin. “Sales of midlevel violins—those valued under $100,000—have weakened like nearly everything else in the recession.”

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