Web sites for creating “personal portfolios” — an investment middle ground between stocks and mutual funds — are starting to proliferate, and one such site hopes to team up with banks, brokerage houses, and 401(k) plans.

The services enable individual investors to pick a collection of stocks, customize their allocation, and trade actively for one monthly fee — all on the Internet.

“I see ‘folio investing’ as an option for both stock investors and mutual fund owners, because it combines the benefits of both of these ways to invest,” said Steven M.H. Wallman, founder and chief executive officer of Foliofn Inc., whose Web site was the first of its kind to go live.

The site offers low-cost diversification and lets investors control what stock they buy and sell, as well as when, he said. “You can reduce your risk by investing in 20 or 30 stocks rather than betting on two or three.”

For years, financial advisers have offered such portfolio services to high-net-worth investors. Other investors generally buy mutual funds, which lack flexibility, or individual stocks, sacrificing diversification.

For a flat $29.95 a month or $295 a year, Foliofn allows individuals to own and manage up to three personal portfolios on its Web site. Each portfolio can hold up to 50 stocks. There is no investment minimum and no monthly trading limit, but investors cannot trade the same stock more that twice a day.

Investment advisers are on call at Foliofn’s call center around the clock, to help with stock picking or allocation questions.

The site, which was launched in June, has amassed $300 million of assets.

Mr. Wallman, a former commissioner of the Securities and Exchange Commission, said personal portfolios provide a sensible alternative for investors without requiring them “to become financial analysts in their spare time” — because of the advice available through the site.

Nancy Smith, vice president of education and content development for Foliofn, said personal portfolios put investors in control of their investments.

Unlike mutual funds, most of which penalize quick withdrawal, stocks in personal portfolios can be bought and sold at any time, she noted. “With a mutual fund, you can’t express your preferences,” Ms. Smith said. “Maybe you want to buy 29 of the 30 stocks in a tech fund, but you don’t having that kind of flexibility. With personal portfolios you do.”

Foliofn is currently marketing its service through advisers, but Ms. Smith said it also plans to go after customers through banks, brokerages, mutual funds, and the 401(k) market. “This is clearly a better way to invest,” she said.

The site is the pioneer of the Web-based personal portfolio industry. Two others, Netfolio.com and eInvesting.com, which will provide similar services, are set to debut soon.

Netfolio.com, to be launched this month, will let individuals put together a personal portfolio with five to 40 investments for $20 a month or $200 a year. The minimum account size will be $5,000.

The American Association of Individual Investors, which has 170,000 members, has agreed to make Netfolio Inc. the exclusive provider of personal portfolio services through its Web site, the company said.

E-Trade Group Inc. says it plans to launch a third personal-portfolio provider, eInvesting, in the first quarter. At first it will be marketed only to E-Trade customers. Investment minimums, fees, and other details are still being worked out, the company said.

Each site will offer online advice to investors. Foliofn’s advice engine, Folio Wizard, asks potential investors six questions about elements such as time horizon, risk tolerance, and goals. The software then suggests allocations and individual stock recommendations.

Netfolio offers modeling capability fed by Standard & Poor’s Compustat under an exclusive agreement. Netfolio also offers access to Hulbert Financial Digest, a service that rates investor newsletters.

Netfolio, Foliofn, and E-Trade say their personal portfolio services will revolutionize individual investing. But Robert Heggarty, an analyst with the TowerGroup consulting firm in Needham, Mass., said they will not kill off mutual funds or stock picking.

“This is a product with a lot of appeal, because mutual fund investors are a bit disenchanted with their returns of late, and they always feel they can do better,” Mr. Heggarty said. “Mutual funds are not going to be displaced by this, but it is going to force them to be more flexible with what they offer.”

Fund companies are already starting to offer extra flexibility by marketing exchange-traded funds more widely and as well as funds that can be bought and sold on the same day, he pointed out. Even firms like Fidelity Investments are offering sector funds priced on an hourly basis, he said.

“The time horizon for holding mutual funds and mutual fund products is compressing,” Mr. Heggarty said. “Fund companies are responding” to investor gripes, he said.

“Personal portfolios are still only an alternative investment vehicle” and will not redefine the industry, he said. They are likely to have $25 billion of assets in three years, he said, but “that isn’t even a dent in the $7.5 trillion people have invested in mutual funds.”

Mr. Wallman insists that personal portfolios are the future.

“Folio investing certainly isn’t a niche — it’s a better way to invest,” he said. “And because we have priced the service for less than a single trade at many brokers, it will appeal to almost any investor.”

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