Your Money: Apr. 26, 1999

• Share

How Fund Mergers Hurt You

More firms like Invesco are trying to bolster faltering, small-cap mutual funds by combining them with winners (382 mergers last year alone), but it may be a losing proposition. To give long-suffering shareholders a boost, it seems, high-flying investors have to take a dive. According to a recent academic study, the performance of the acquiring stock funds, as measured by their objective-adjusted returns (how they fared relative to their peers), tends to drop after they've absorbed all that new cash.

Is Your Broker Working Hard?

When it comes to selling your home, brokers have always insisted they can get you the highest price. That's right--almost. According to a study by Penn State professor Abdullah Yavas, they sell their own houses for an average of 3% more than they get for their clients. That difference may not mean a lot on a standard 6% commission, but it could help fatten your bottom line. So the next time a broker is putting your home on the market, tell her to price it as she would her own--just a bit more.

Don't Buy a Y2K Bank Account

Computer meltdowns aren't the only threat posed by the Y2K bug. Scam artists are trying to convince people they need to move their money into "Y2K safe" bank accounts, which means giving the crooks the chance to swipe your savings, regulators told Congress last week. Most banks are Y2K compliant--and if not, the FDIC insures each account for as much as $100,000.

--by Daniel Eisenberg