If a fund manager goes, should you?
“Rock star” fund manager Robert Rodriguez recently announced his plans to step down as lead manager of FPA Capital and New Income funds, said Daren Fonda in SmartMoney. Which presented fund investors with a tricky question: “Should you bolt if your star manager quits?” Experts don’t foresee any drastic changes in Rodriguez’s funds, which for the most part will follow the philosophies he established. “The force of Rodriguez’s opinions carries a lot of weight,” says Morningstar analyst Christopher Davis. Still, there’s always the risk that new management won’t have the “magic touch.” Fidelity’s Magellan fund had “several terrific years” after legendary manager Peter Lynch handed over the reins in 1990. But the fund then fell flat and hasn’t recovered. Then again, the “new guy” can sometimes be a spark plug. In 1997 Scott Schoelzel took over the Janus Twenty fund from Tom Marisco. Over the next 10 years, his returns beat those of 98 percent of his peers.
Harsh lessons about 529s
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You might want to take a closer look at what’s in your kid’s 529 college savings plan, said Jason Zweig in The Wall Street Journal. In particular, make sure “your teenager is not up to her armpits in the stock market.” The portfolio options in these plans aren’t always as conservative as their names suggest. Consider the popular age-based options offered by most states: “By the time the student hits college, less than 20 percent of the money should be at risk in stocks—limiting the potential damage from even an epic bear market to 10 percent or so.” Yet many such plans are loaded with stocks, according to Mercer Bullard, a securities-law professor at the University of Mississippi. “In some states, the asset allocation for the 16- to 18-year-olds looks as if it was designed by the 5-year-olds,” he says. But don’t give up on 529s entirely. The “tax benefits alone” make it worthwhile to contribute to a plan.
Scams exploit stimulus
Scam artists have wasted no time dreaming up schemes related to the government’s economic stimulus plan, said Kimberly Lankford in Kiplinger’s Personal Finance. “The Federal Trade Commission, Better Business Bureau, and Federal Bureau of Investigation are warning people about several types of scams related to the stimulus.” One such con promises a $12,000 government grant, when in fact targets would be “signing up for recurring credit card charges that can be tough to shed.” In another scam the e-mailer poses as the IRS, claiming that the individual’s stimulus money will be forfeited unless he hands over bank account information. If you receive such a notice, just delete it.
