MUTUAL FUND INVESTORS SHOULD BE FARSIGHTED

This "Financial Focus" column is prepared by Edward Jones Investments, headquartered in St. Louis. Jones includes branches throughout the nation, including Cape Girardeau and Jackson.

More than 11 years have passed since Oct. 19, 1987, the day the stock market lost 508 points and 22 percent of its value. Anyone in the financial services industry can tell you what he or she was doing that day. It was difficult to obtain a reasonable evaluation of what was happening; the biggest challenge was to stay calm and not panic.

Of course, we now know that investors who sat tight and stayed the course were rewarded. Mutual fund shareholders may have fared the best. According to Lipper Analytical Services, almost every growth and growth-and-income fund with a history of 10 or more years has more than doubled since the crash.

In 1987, the year of the crash, mutual fund assets were less than $800 billion. Today they're approaching $5 trillion.

There are many reasons for this growth. Foremost are the huge expansion in the number of funds and the variety of investment options. At one time investors achieved portfolio diversification by selecting a few stocks in different industries. But effective diversification was possible only in larger portfolios. Mutual funds offered small investors the first opportunity for real diversification. Then the industry began assembling more specialized funds to offer different objectives and varying degrees of risk.

Today investors can choose from an extensive menu of mutual fund types. They can go from global investing to owning part of the Standard & Poor's 500 Index; from health and technology to gold and precious metals; from the Pacific Region to emerging European markets. It's all accomplished by selecting from almost 8,000 different mutual funds.

Through all this growth one thing about mutual funds remains the same:

They are still designed for long-term investing. Good markets and quick profits can make investors shortsighted, likely to sell at the first decline. But as history has shown, if your objective is clear and you've selected the proper funds, hang in there. You'll likely be rewarded.

The Southeast Missourian does not recommend that readers buy or sell stocks featured in this column, which is provided for informational purposes only.