The other kind of tax advantage in a fund is net unrealized depreciation.

FORBES: Playing the Rebound

In Watt's Latin America Equity fund, for example, you are getting shares of YPF, an integrated oil company in Argentina that trades at 6.5 times estimated cash flow (expected 1998 earnings plus depreciation). (The comparable ratio for Exxon is about twice that.) Buy the fund and you are buying YPF even cheaper, since the fund trades on the New York Stock Exchange at a 29% discount to net asset value.

FORBES: Playing the Latin rebound

The cable billing runs an operating margin (net before depreciation, interest and taxes, as a percent of sales) of 11%, versus 30% for fund servicing.

FORBES: The Track Less Taken