2000 Press Releases
FOLIOfn Launches Revolution In Online Investing
05/24/2000
VIENNA, Virginia – FOLIOfn, Inc. today officially opened its virtual doors for business, offering for the first time a unique new system that will change for the better the way people invest in the stock market.
FOLIOfn’s proprietary system, known as FOLIO Investing, uses the Internet and advanced technology to let investors easily buy and sell entire diversified baskets of stocks—known as “Folios”—with just a few clicks of the mouse. Instead of trying to pick stocks one at a time, or trying to identify the “perfect” mutual fund, investors simply select or create Folios that satisfy their investing goals and preferences. Investors can base their choices on preferred risk levels, personal values, industry sectors and other factors.
“An investor who believes the biotech sector is currently a good investment but doesn’t know which of the many biotech stocks is the right investment can now buy a whole Folio in that sector without incurring the costs, fees and taxes of a mutual fund,” said Steven M.H. Wallman, FOLIOfn’s founder and CEO. “It’s a better way to invest because an investor is obtaining a more diversified portfolio rather than just buying a few stocks. And it’s an easier way to invest because picking a sector, industry or other preference is much less difficult than trying to pick the right stock or fund.”
FOLIOfn currently provides investors with a wide selection of approximately 90 “Ready-to-Go” Folios that reflect particular market indexes, sectors or risk levels. Hundreds of additional Ready-to-Go Folios will be added over time.
FOLIOfn also provides investors with the tools to customize or create their own Folios from scratch based upon a wide variety of investing criteria. Investors can quickly and easily tailor any Folio—including every Ready-to-Go Folio—to reflect their own personal preferences. For example, if an investor wants to purchase a Folio comprised of the 30 stocks in the Dow Jones Industrial Average, but prefers not to own tobacco stocks, a few clicks of the mouse removes the tobacco company from the Folio, leaving the investor with the “Dow 29.” No mutual fund, exchange-traded fund or other vehicle can offer investors that flexibility and control.
“There are plenty of online and discount brokers, but there is simply no other system or company that offers this novel and unique approach to investing,” said Wallman, who served as a Commissioner of the U.S. Securities and Exchange Commission from 1994 to 1997. “FOLIO Investing from FOLIOfn provides investors with the first truly new way to invest in the stock market since the introduction of the index mutual fund, which first provided relatively low-cost diversification to the typical investor. We believe FOLIO Investing will become the definitive model for smart investing in the 21st century.”
Studies show that investors who own a diversified stock portfolio increase their chances of achieving higher expected returns for the same amount of risk as investors who own just a handful of stocks. Until now only the wealthiest investors and large institutions could afford to buy and trade portfolios of 20, 30 or 50 stocks. FOLIO Investing is designed specifically to help individuals and smaller institutions take advantage of the crowning principle of smart investing—diversification.
“Study after study shows that virtually no one can consistently select winning stocks, and yet many investors feel there is no good alternative to stock picking,” said Wallman.
“Many investors turn to mutual funds because they recognize the value of diversification,” Wallman added. “But they are also giving up the benefits of direct stock ownership, such as the ability to reduce taxes by controlling the decision of when and how much to sell. Moreover, many mutual funds underperform the indices, and studies show that even past superior performance is no indication of future success. In addition, mutual fund holders are often charged high fees they don’t realize they are paying because the actual amount charged isn’t clearly disclosed to investors in customer statements.”
FOLIO Investing is available for a low annual flat fee that covers all Folio trading, all year long. For a fee of just $29.95 per month (or $295 for the year) investors can create, own and trade as many as three Folios, each of which can hold from one to 50 stocks. Investors may also select a quarterly billing option and pay just $85 per quarter. Investors who wish to create more than three Folios can do so for a fee of only $95 per year (about $8 per month) per Folio. Trades are executed twice a day during trading windows. Direct trades—regular trades that go to the market for execution without waiting for a window—are available for just $14.95 per trade.
By comparison, the average domestic equity mutual fund charges an annual fee of 1.23% of assets1, which means the average mutual fund would cost $467 per year for a $38,000 investment, the amount held in funds by the typical fund investor. And this does not include sales charges. With stocks, it would cost $598 in commissions to create—just once—a single portfolio of only 30 stocks using a discount broker charging $19.95 per trade. And the investor would have to pay that amount again and again whenever he or she wanted to add to, subtract from or otherwise modify that portfolio. For just $29.95 a month, FOLIOfn lets investors purchase and trade—all year long and with no additional fees or commissions—up to three Folios containing up to 50 stocks each.
Each Folio can be changed as much as the investor wishes. For example, an investor could purchase a market index Folio and then trade it for a biotech Folio and then switch over to an Internet Folio. Over time, as various stocks change in value, a portfolio can change from what the investor originally selected. FOLIOfn makes it easy for investors to rebalance their Folios so those individual stock holdings reflect their original proportions. This rebalancing can be done as little or as often as an investor wishes, with no extra trading or commission charges.
In contrast to many other brokers and funds, FOLIOfn tracks investors’ tax lots. FOLIOfn’s sophisticated tax tools let investors sell the shares that minimize their taxes or meet other tax planning goals. In addition, FOLIOfn will automatically provide reports for tax filing, helping to simplify the tax process.
“It was important to me to create a better way to invest. It was also important to create a better way to charge for it,” said Wallman. “Flat-fee pricing aligns our interests with those of our customers because we have no incentive to encourage investors to trade more often than makes sense for them. And we don’t penalize investors for their investing success. Unlike companies charging asset-based fees, our fees don’t go up just because the market does or the amount of money in the account does. The bottom line is that we’re committed to building a company that will become synonymous with innovation and integrity in the marketplace. We will operate at the intersection of technology and finance, providing our customers with smart investing alternatives.”
About Folio Investing
Folio Investing, a division of FOLIOfn Investments, Inc., is an online brokerage that enables investors to manage stocks, ETFs, and mutual funds as integrated investment portfolios called “Folios” that deliver better control, greater transparency, and lower cost. Investors can create their own Folios, much like creating personalized ETFs or mutual funds, or invest in over 100 Ready-to-Go Folios representing market indices, sectors, geographical regions, target dates, and more. The Folio Unlimited Plan features unlimited commission-free trading in twice-daily windows for only $29 a month or $290 a year. Ready-to-Go Folios can be managed or unmanaged, are not registered investment companies, and are offered by FOLIOfn Investments, Inc., a registered broker-dealer. FOLIOfn Investments, Inc. does not provide investment, tax, or legal advice. FOLIOfn Investments, Inc., is a member of FINRA/SIPC.