Spare Change

Fund Fact

A growing number of mutual funds are merging as financial-services companies come under pressure to cut costs, but fund investors don’t always come out winners. Fund mergers can depress the performance of an acquiring fund, while bestowing most of the merger’s benefits on the acquired fund’s shareholders.

Money Tip

Americans paid $4.3 billion in ATM fees last year. The average ATM fee charged by banks to non-customers who use their machines is $1.54. Banks also are charging their own customers who use a “foreign” ATM an average of $1.37, for a combined total of $2.91 for each withdrawal. One alternative: ask for cash back when you make a debit purchase.

Market Tip

The “quant funds” are coming. Quantitative mutual funds use computers to find undervalued stocks, relying only on that data to drive investing decisions. Quants argue that computers are superior to humans because they aren’t beguiled by skyrocketing share prices or cowed by implosions. But beware: quant funds incur more taxes than index funds because they trade more frequently and thus pile up greater capital gains.

Net Nugget

An intelligently assembled portfolio of bonds is an important ingredient in a balanced investment strategy. Bonds are rated according to the likelihood that the company or government agency will be able to pay back the loan it has taken out with you. Stick with bonds rated “investment grade,” BBB (or Baa) and higher. Everything below that is “junk” and denotes higher risks. Moody’s and Standard & Poor’s are considered the most reliable rating agencies. You can view ratings at www.standard andpoors.com for free.