Based on the fact that all S&P 500 mutual funds track the same index, it could be assumed that any one of these some-odd 65 funds is as good as the other, but a recent study by the Investment Company Institute suggests otherwise.

According to the Washington-based trade group, S&P mutual funds are far from one-size-fits-all. Sure, the funds' underlying holdings are practically identical, but creative variations in asset levels, account size, minimum investment requirements and fees differentiate the funds and can have a significant impact on an investor's total return.

And while it's also true that since S&P funds spend next to nothing on research because they track an index, another cost disparity exists due to the fact that some funds charge 12b-1 fees, while others do not.

$255 Billion

Also, since index fund buyers tend to be bargain shoppers, the S&P 500's product line, which holds a combined $255 billion in assets, is very popular among the budget conscious. Those with expense ratios of 0.40% are garnering more than 90% of the flows, said Sean Collins, chief economist at the ICI.

(c) 2005 Money Management Executive and SourceMedia, Inc. All Rights Reserved.

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