Online mutual fund investors tend to be young, have a high degree of risk tolerance and possess strong confidence in their own ability to make decisions about their holdings, according to a study by Spectrem Group, a research and consulting firm based in San Francisco.

The study was based on two research projects conducted by Spectrem and NFO Worldwide, its parent company over the past year. Spectrem used data from its mutual fund research program to determine how many fund owners use the Internet, and noted their characteristics, including age, income and amount of assets.

NFO analyzed surveys completed by 511 online households to determine how many were active online investors. Of that number, 369 were found to be online investors and 142 were considered off-line investors. The 142 were considered off-line investors even though they had Internet access because they used the Internet for research but not to trade.

The study found that the most active online investors are those with Internet brokerage accounts, and they tend to have more assets than most other investors. New fund purchases were the most common type of online transaction made.

Over half of the online investors were under 44 years old and tended to get most of their investment advice from friends and relatives. They also viewed themselves as experienced investors, and said they were comfortable making their own investment decisions.

Online investors are concerned with the same issues that drive most discount brokerage users who do their trades by phone, said William White, a practice leader of the Spectrem Group. They want low-priced transactions and the ability to make trades quickly and easily, even when the market is unstable. But, the study suggested that those who do not invest online are not likely to start doing so in the near future. For example, it showed that only 23 percent of all fund owners who are online used the Internet for research. But 100 percent of those fund owners with Internet access to a brokerage account used the Internet to get information.

The great majority of investors will probably continue to invest off-line because they feel more comfortable consulting brokers or financial advisors, the study concluded. Those polled who were affluent said they still want a "high touch" relationship with a broker or advisor.

Of those without online brokerage accounts, relatively few said their Internet use would increase, even if service was improved. Only 25 percent said their online activities would increase dramatically in the next year.

Spectrem concluded from these results that the sale of one-dimensional mutual funds, which are only available online, will plateau.

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