BOSTON - Fidelity Investments massively cut expense ratios on two of its Standard & Poor's 500 equity index funds effective April 18, leveling the price difference between its retail and institutional index funds.
The expense ratio for the mainly retail Spartan Market Index Fund was cut 58% - to 19 basis points from 45. The expense ratio on the mostly institutional Spartan U.S. Equity Index Portfolio was lowered 32% - to 19 basis points from 28.
The new rates are guaranteed through Dec. 31, 1999.
The new expense ratio makes Fidelity's index funds more competitive. For example, it undercuts by one basis point the fee charged by The Vanguard Group of Investment Cos., Malvern, Pa., for its retail Vanguard S&P 500 Portfolio. Vanguard's Institutional Index Fund carries an expense ratio of only six basis points.
In a separate move, Fidelity also reduced expenses for four taxable bond funds in the Spartan series. Expense ratios were lowered to 38 basis points from 65 through Dec. 31, 1998, on its investment grade, Ginnie Mae, limited maturity government and short-term Spartan bond funds.
Lipper studies rating system
NEW YORK - In its most recent quarterly equity fund performance analysis, mutual fund ranker Lipper Analytical Services Inc. indicated it might begin to rate funds as well.
In a move that would bring it closer to Morningstar Inc., Chicago, its chief rival in the field of mutual fund analysis, Lipper designed by way of example a mutual fund "report card" to rate two popular mutual funds, Fidelity Magellan and Vanguard Windsor.
Lipper's trial system "graded" each fund an "A" for appearing in the top quintile twice as often as the normal frequency in a number of performance categories.
Of 17 potential A grades, Magellan received six and Windsor, seven.
Lipper suggested a rating system that gave funds with at least five A's an "Honors" designation and funds with more than eight, a "High Honors" rating.
Lipper is seeking input from subscribers regarding whether a move to rating is needed and how the rating should be portrayed.
New Morningstar site
CHICAGO - Morningstar Inc. signed up three on-line discount brokers - Jack White & Co., American Express Financial Direct and Fidelity Investments - to provide instant on-line trading capabilities for its new interactive investment site on the World Wide Web.
The interactive site provides investors with tools to analyze both mutual funds and individual securities together, using Morningstar's software and real-time news and stock price quotes, all on a single Web page. The address is http: www.morningstar.net.
The service is free.
GT launches fund
SAN FRANCISCO - GT Global Inc.'s new GT Global Floating Rate Fund will give individual investors access to an asset class usually pursued by institutional investors.
The fund will invest in senior secured floating-rate loans and corporate debt securities.
The fund is subadvised by a subsidiary of Chancellor LGT Asset Management, New York, which was acquired by GT Global's parent, Liechtenstein Global Trust, last year. The fund is the first partnership between the two affiliates.
Variable annuity changes
Franklin Templeton Group, San Mateo, Calif., and Allianz Life Insurance Co. of North America, Minneapolis, added a new option. The Franklin Valuemark IV program is the first flexible-premium deferred variable annuity to offer a combination of Franklin, Templeton and Mutual Advisers portfolios as investment options.
Valuemark IV is the only variable annuity program offering fund management by popular value manager Michael F. Price, formerly of Heine Securities, Short Hills, N.J. Mr. Price sold his fund company to Franklin Templeton last year.
Variable annuity partners Fidelity Investments, Boston, and Nationwide Financial Services Inc., Columbus, Ohio, revamped and expanded the options in the program they jointly offer through brokerage houses and banks.
The Fidelity Advisors Annuities series offered through Nationwide offers 13 diversified VIP funds, up from six under the previous arrangement.
Fidelity switches managers
BOSTON - Erin Sullivan was named portfolio manager of the Fidelity Emerging Growth Fund, effective April 14. Ms. Sullivan replaces John Hurley, who reportedly has joined a former boss, Larry Bowman, at Bowman Capital Management. Mr. Hurley had only been at the helm of Emerging Growth since January.
Ms. Sullivan is still managing the Fidelity Select Software and Computer Services Portfolio and handed management of the Fidelity Select Retailing Portfolio to Ramin Arani in January.
Calvert picks new CEO
BETHESDA, MD. - Barbara J. Krumsiek was appointed president and chief executive officer of the Calvert Group.
Ms. Krumsiek replaces Clifton S. Sorrell Jr., who is leaving to pursue other interests.
Ms. Krumsiek is one of only four women heading up a large mutual fund company, according to Calvert. She had been senior vice president and managing director of the mutual fund business at Alliance Capital Management L.P.. New York. Alliance is reviewing options regarding a replacement for Ms. Krumsiek.
L. Roy Papp Associates, Phoenix, Ariz., introduced its third mutual fund, the America-Pacific Rim Fund.
The no-load fund will invest in stocks of American companies with substantial sales and income from Pacific Rim countries. The investment concept is similar to that of an existing fund, the Papp America-Abroad Fund.
OppenheimerFunds Inc., New York, launched an open-end mutual fund that will seek the returns of commodities, using the Goldman Sachs Commodity Index as its benchmark. The fund will invest in commodity-linked structured notes, futures contracts, commodity-sensitive equities and options and short-term fixed income securities.
Gregory Stitt, a spokesman for OppenheimerFunds, said both retail investors and institutions could use the fund. It will be marketed through Oppenheimer's traditional retail channels, such as brokers and financial advisers, but an institutional share class is offered.
J.P. Morgan Investment Management Inc., New York, introduced a no-load institutional mutual fund, the JPM Institutional Global Straegic Income Fund. The new fund will invest in fixed-income securities in non-dollar-denominated securities, non-securitized mortgages, corporate private placements, emerging market debt and high-yield corporate bonds.
Paul G. Barr contributed to this column