A new website, whose purpose is to assist market timers - a goal which conflicts with that of the industry's major trade group - is nevertheless soliciting advertising from the trade group's membership.
FundMovers.com of Los Angeles is courting several fund companies, including Fidelity of Boston, to advertise on the site, said Kathy Nicholas, the advertising director for the site.
No fund has yet agreed to advertise on the site, but there has been strong interest expressed, said Nicholas. She said she had a meeting scheduled to discuss such advertising with Fidelity. Fidelity could not be reached for comment.
FundMovers.com offers mutual fund investors information and advice on momentum investing and market timing.
The site's focus runs contrary to the Investment Company Institute's stand against market timing and chasing hot money.
"As an industry, it's up to us to lay out tried and true strategies of investing," said Jack Brennan, chairman of the ICI board of governors and CEO and chairman of the Vanguard Group of Malvern, Pa., at an ICI luncheon last month. "As we move into a new century, we as an industry need to encourage prudent investing."
The ICI can do little to discourage the site, said John Collins, a spokesperson for the ICI.
The site has attracted an estimated 100,000 visitors since it went online in late March, Nicholas said.
Loren Fleckenstein, the site's founder and editor, said he created FundMovers.com to provide information for investors who trade mutual funds.
"You cannot say that there are not people who can't make money pursuing an active investing or trading strategy on funds," he said. "This site is for the dedicated individual who is prepared to do the homework to master a strategy and follow the market on a regular basis with a money management system to control losses. It doesn't necessarily require a pro, but it needs to be someone who is dedicated." Another website Fleckenstein runs, TradingMarkets.com, provides advice and information for day traders.
A long bull market has increased market timing of mutual funds, but the practice is a losing game for most investors, said Burton Greenwald, president of Burton J. Greenwald Associates, a mutual fund consulting firm in Philadelphia.
"The fact that we can buy in low and sell high is very sexy and intriguing to a lot of investors but very few people have been successful doing it," he said. And, if market volatility continues, investors' appetites for market timing will drop considerably, he said.
Fleckenstein decided to launch a site dedicated to market timing and momentum investing in mutual funds because of the large number of inquiries he received about exchange-traded funds on TradingMarkets.com.
"We were getting a lot of questions about exchange-traded funds, so there was a crying need for people to understand the fundamentals of an exchange-traded fund," he said.
Sector funds and funds that have low redemption and exchange fees are ideal for a short-term investment strategy, he said.
Fleckenstein says his site is not for most mutual fund investors. Investors with long-term goals like retirement should not consider market timing as an investment strategy, he said.
"The vast majority of people, I'm willing to bet, should not be trading," he said. "But, for all of those that are willing to do this, exchange traded funds and mutual funds do offer yet another asset in their trading repertoire and they offer certain advantages."