Move To Trade Stocks In Decimals Could Save Billions

Trading stocks in decimals instead of fractions could save investors as much as $9 billion a year, according to the director of equity trading at American Century Investment Management.

Harold Bradley said the existing system on the New York Stock Exchange, which uses one-eighth of a dollar increments, artificially inflates the spread between buyers and sellers of the more actively traded stocks.

The exchange had been resisting attempts to trade in decimals, but relented Thursday. The nation’s largest exchange will try to make the conversion by the year 2000, officials said.

“It would be a windfall for investors,” Bradley said. “Survey after survey shows investors want to price and trade equities the same way they buy shoes, medicine and bread.”

How much investors save on a particular stock will depend on how actively it trades, he said.

May fund returns best in five years

The month of May was the best month for U.S. mutual fund investors - in terms of returns - in almost 5-1/2 years, according to an industry report.

The average U.S. stock and bond fund rose 3.89 percent last month, according to Micropal Inc., a research group that tracks fund performance.

Those were the biggest monthly gains since December 1991 when the average fund gained 4.65 percent.

Stock funds gained an average 8.03 percent in May, exceeding the 6.08 percent rise of the Standard & Poor’s 500 Index, while the average bond fund rose 1.19 percent, Micropal reported.