Mutual Fund

City extends application period for tax credits Baltimore residents who lost the chance to get a property tax break because they missed the application deadline now have a second opportunity. If you went to settlement on a new home after Oct. 1, 2004, you can apply for the city's new-construction tax credit through Aug. 28, when the amnesty period ends. Homeowners in properties that were substantially rehabbed after being vacant may also be eligible. The credit reduces a homeowner's property tax bill by half and then phases in the full amount over a five-year period.

The two best-performing Maryland mutual diversified stock funds were boosted in the first quarter by their holdings in consumer-oriented stocks, such as Apple and Amazon. Ellicott City-based Hussman Strategic Growth fund gained 7 percent while T. Rowe Price Group's New America Growth fund posted a positive return of 3.4 percent during the quarter. That may be surprising, given declining consumer confidence in a deepening recession. But consumers are still buying, just not as much. "Even though people seem to worry most about consumers, consumer spending has almost never declined materially on a year-over-year basis even in the current downturn," said John P. Hussman, the manager for his namesake fund, which also hedged its portfolio against the impact of market fluctuations.

New York -Critics have long complained that mutual-fund fees are too high, wrongfully enriching Wall Street at the expense of ordinary Americans. Yesterday, the U.S. Supreme Court said it would take a crack at the explosive issue. The court agreed to hear a case in which individual investors have accused their fund company of charging excessive fees. At issue is the legal standard that small investors must meet to bring lawsuits against fund companies. The court will determine whether a ruling last year sets too high a bar for investors to challenge the annual levies.

Baltimore money manager Legg Mason Inc. is overhauling its mutual fund lineup and planning to introduce two products after losing millions last year in the market turmoil and as investors pulled money out of its funds. The reorganization means the company likely will whittle its current offering of 142 mutual funds, Matthew Schiffman, Legg's head of product and marketing, said yesterday. Legg still expects to introduce two new funds in the spring, said Schiffman, who was appointed to the new position in November to create a product innovation team.

While the average U.S. stock mutual fund plunged nearly 38 percent last year, the Hussman Strategic Growth fund based in Ellicott City limited its annual loss to 9 percent. The fund posted the lowest negative return among 157 Maryland-based stock mutual funds tracked by The Baltimore Sun, according to data provided by Bloomberg News. The Hussman fund, whose holdings included consumer brands such as Nike, Coca-Cola and Best Buy, lost 12.9 percent in the fourth quarter. That no Maryland equity fund was in the black in 2008 reflects a year with the worst stock market performance since the Great Depression.

Brace yourself: Your mutual fund fees will likely rise next year. Management fees are often tied to the amount of assets in a fund. The more money in the fund, the lower the fees. But with the plunge in stock prices and investors pulling cash out of funds, assets have been falling. It's easy these days to forget about fees when your fund might have lost 40 percent or more in the past year. But fees matter over the long run, and you can end up with a lot less money even if you're paying what seems to be only slightly more for a fund.

First, stock market losses left a sting. Now, after a nearly 50 percent decline, the losses feel like an open wound. That's especially true for retirees who depend on their savings for living expenses. They've watched in horror as even portfolios light on stock mutual funds have lost 20 percent or more. "I look at their portfolios, and I can't believe my eyes," said Cathy Curtis, an Oakland, Calif., financial planner. When she talks to some clients, she said, "I hear their voices quavering, and I know they aren't sleeping."

For more than 25 years, the highly regarded Sequoia Fund was closed to new investors. But this past spring, the mutual fund once again flung open its doors to bring in more assets. Sequoia has plenty of company. As stock prices fall and redemptions rise, many mutual funds that were off-limits for years are suddenly open. A year or so ago, about 200 out of the 7,000 U.S. mutual funds were closed, says Russel Kinnel, director of mutual fund research at Morningstar Inc. Now, it's about 40 or 50. Investment companies close funds to new investors for all sorts of reasons.

It's the dilemma facing just about anyone who dares peek into their 401(k) statements or other investments these days: Should they sell a mutual fund or all their funds? Just about anything in a 401(k) looks ugly - downright terrifying. So what's a person to do? This is becoming an increasingly complex decision, even for the pros who are starting to realize that current financial conditions aren't modeling the experiences they've had for the past couple of decades. "We've been talking people down from the ledge," said Edina, Minn.