Will some free mutual fund services go the way of banking services that once cost savers nothing?
The Denver-based Janus Group has instituted a $2-per-call, 900-line telephone service for shareholders who use an automated system to switch money among its nine funds. Janus is believed to be the first fund group to add such a charge.
The $1.2 trillion fund industry -- and especially no-load firms such as Janus that sell directly to the public -- heavily promote toll-free customer service lines that let investors buy and sell shares.
Janus, which manages $5 billion, still offers a free exchange service during regular business hours. But Janus investors will pay $2 for calls to a new 24-hour system that uses touch-tone phones.
Chrissy Snyder, a Janus spokeswoman, said that the new systemwas installed mainly to handle the huge volume of requests it gets when trade recommendations are made by several popular newsletters.
"When subscribers hear it [an exchange recommendation], they seem to panic," Ms. Snyder said. "They feel like they have to get out right away. We felt our long-term investors were being hurt by this."
Other fund families deflect floods of newsletter-inspired trades by limiting how many switches investors can make.
Janus still allows four switches per year.
Spokespersons for several other fund groups said that they would watch the Janus situation but were not currently considering similar phone-service fees.
"They're all going to have to charge down the road," said Charles Rother, a fund analyst from Los Alamitos, Calif.
"It costs the fund a lot to make those switches."