Money Buzz 10/04
Invesco, Janus, Merrill Lynch, Putnam Investments-the list of mutual fund families under fire for questionable practices is swelling. Still, investors who paid front-end sales loads may be reluctant to switch fund families, fearing another round of upfront fees and capital gains taxes.
Before you take it on the chin, says John Gannon, vice president of investor education at the National Association of Securities Dealers, check the fine print of your fund prospectus. "Some funds allow a net asset value (NAV) transfer, which enables investors who paid a front- or back-end load to purchase a new fund without having to pay the upfront sales charge," he says.
Information about NAV transfers can usually be found in a fund's prospectus or statement of additional information, in the "sales-charge reductions and waivers" section. "Carefully read the prospectus, or talk to your broker," advises Gannon. Investors making NAV transfers typically must purchase the new fund within 30 to 90 days of the sale of the original fund.
If the fund doesn't offer NAV transfers, are you out of luck? Not necessarily. "Almost all funds have ways to waive front- or back-end sales charges, some of which are extremely esoteric," says Gannon. Read the prospectus to see if any waivers apply to you.
The Check's in the E-Mail
Ever hear of "Check 21"? You will. This little-known banking law will pave the way for major changes in the way businesses make and receive payments by check.
Technically, all Check 21 does is give an electronic facsimile of a paper check equal legal standing to the original paper check it represents. But that small step will bring big change, says Stuart Williams, director of business development for the software division of CheckFree, an electronic commerce company based in Norcross, Georgia.
"Currently, a check drawn off a bank in California and presented for payment in New York must physically travel across the country to the originating bank," he explains. With Check 21, banks will have the option of transferring and printing substitute or "image-replacement document" checks, consisting of an image of the front and back of the check, slashing the time it takes a check to clear from days to hours.
Just how soon will entrepreneurs enjoy quicker access to revenue-or face a shorter float before checks written are cashed? Williams says that while banks will have the legal capability to use substitute checks when Check 21 goes into effect on October 28, the infrastructure to process paper payments electronically is not yet in place.
"Banks on either side need to be on a full image environment, so it will develop over time until we see a predominant share clearing electronically. That is probably as much as two years out."
is a freelance writer in New York City specializing in business and finance.