Info to identify mutual funds based on component stocks

From: snarasim@genre.com
Subject: Info to identify mutual funds based on component stocks
Date: Thu, 4 Feb 1999 08:32:51 -0500

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Top of Thread: Info to identify mutual funds based on component stocks "Marshall Farr"
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There are a couple of misconceptions in your posting. I will try to clarify
them as well as I can.

i) Open Ended Mutual Funds (which is what you are hopefully talking about)
are not 'listed' on any exchange - at least not to my knowledge (I have
worked for a mutual fund). 'Listing' of a security on any exchange means it
is available for sale at that Exchange. Mutual Funds can only be bought or
sold from the mutual fund companies - or thru advisors/brokers. The number
of shares that a Mutual Fund can issue are potentially unlimited. The share
price of a mutual is decided directly by the number of shares outstanding
divided by a 'reasonable' estimate of the value of the securites being held
by it.
ii) However, Closed-end Mutual Funds ARE listed on Exchanges - but then
they do not behave like Open-End Mutual Funds. The number of shares in a
Closed-End Mutual Fund is limited and the share price fluctuates based on
supply and demand.
iii) Mutual Funds do not HAVE to identify their holdings concurrently with
the time that they are holding securities. In fact most funds publish their
list of holdings as of the end of the previous month (or previous quarter)
- - MUCH after the fact. It is quite possible that, say Mutual Fund X has 10%
of its holdings in Company A on 12/31/1998 and by the time they publish
these holdings, say on 1/15/1999, they have sold most of their holdings in
Company A.

There is a good reason for this - if Mutual Funds were to actually publish
their minute-by-minute holdings, it is VERY easy to trace the trading
characteristics of the manager - and do some 'front-running' - i.e., buy
some of the Fund's future holdings BEFORE the fund makes its move and,
after the fund has stocked up on that security, sell at the appreciated
price. Although this 'front-running' is illegal in the eyes of the SEC,
what is to prevent an astute observer of a Mutual Fund from making these
purchases basedon the activities of the Fund?

To make a long story short, such a program is neither available, nor would
it be possible for anyone to put it together - unless they had INSIDE
knowledge of the workings of the Mutual Fund - which would be illegal.


To:     persfin-digest
cc:     "Marshall J. Farr" <farrm (bcc: Seshadri Narasimhan)
From:   "Marshall Farr" <farrm@cpcug.org>
Date:   02/04/99 01:12:50 AM
Subject:  Info to identify mutual funds based on component stocks




     I would like to consider inversting in mutual funds that contain
certain stocks .  Is there any way, including some web program, to
feed in the names of a group of stocks and expect, as a result, a
list of
 mutual funds that have at least a certain minimal proportion of
total holdings of those input stocks?
For example, if I wanted to invest in stocks X, Y, Z and A, I might
want the program to identify all mutual funds that contain at least
5% of its holdings in each of these stocks.  Or, equally acceptable,
would be all mutual funds listed in Nasdaq or Dow Jones or the NY
Stock exchange that contain at least 7 out of 20  of the stocks in
which I am interested.  I would like to know about any program -- the
numbers just given are merely examples -- whose parameters I could
fill in (e.g., the amount of absolute shares in the stocks I
like, or the length of time the mutual fund company has held the
stocks, etc.

     If there isn't such a program, wouldn't it be relatively easy for a
good programmer, supplied with the data base, to write one?  And
wouldn't it be commercially profitable?

Marshall J Farr, PhD

Marshall <farrm@cpcug.org>





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