Do-It-Yourself Fund - investing - Brief Article

Kiplinger's Personal Finance Magazine, May, 2000

INVESTING | Build your own STOCK PORTFOLIO without brokers or professional managers.

THIS SPRING you'll have access to a whole new way of buying stocks, which could be as revolutionary as former Vanguard chief John Bogle's introduction of index funds 25 years ago.

Folio{fn}, a new online company at www.foliofn .com, will give investors the benefits of individual stock ownership with the instant diversification of mutual funds. You can buy a preset group of stocks that meet certain criteria--such as the 50 largest S&P companies or a collection of Internet stocks--which you can then customize to suit your own preferences (eliminating all tobacco stocks, for instance).

Folio{fn} will let you purchase fractional shares, so you can invest a certain dollar amount (the minimum is $100) at regular intervals, similar to an automatic investment plan with mutual funds. But you're spared the high fees, adverse tax consequences and lack of control that come with funds, as well as the chore and costs of selecting stocks one at a time.

You'll pay a flat annual fee of about $300, which may be high for a buy-and-hold investor. But for someone who is more hands on, "it's less than the cost of one trade per month at Schwab for unlimited use of our system," says Folio[fn] founder Steven Wallman, who was a staunch advocate for individual investors while a commissioner with the Securities and Exchange Commission in the mid 1990s. His firm will keep costs low by executing trades only twice a day.

Investors who prefer to select their own stocks without a preset portfolio can still get the benefit of automatically investing small amounts with the new ShareBuilder plan from Netstock Direct (www .sharebuilder.com). For a fee of $2 per trade, you can buy fractional shares in any of the 2,000 largest U.S. companies. A similar service will be available soon at www.u-s-a-account.com.