Comments on: How to Pick the Right Mutual Funds http://www.mint.com/blog/finance-core/how-to-pick-the-right-mutual-funds/ The blog of the free, simple personal finance solution. Track all your spending automatically, find the best deals, save more money. And save the world. Fri, 20 Nov 2009 20:48:42 -0800 http://wordpress.org/?v=2.8.4 hourly 1 By: jiltin http://www.mint.com/blog/finance-core/how-to-pick-the-right-mutual-funds/comment-page-1/#comment-32242 jiltin Tue, 16 Jun 2009 17:19:13 +0000 http://www.mint.com/blog/?p=3465#comment-32242 Mutual funds are not like stock although they are stocks! It is really hard to decide where to invest. All the five criteria depends on how the economy fairs and whether we are in trough or peak..etc. Blindly investing based on these points will not help. people must know whether we are at high or low, these are changing every six months or one year. Hence, a review about the funds are required every three months once. For example, when the dow was 14000+, I pulled all the mutual fund to stable value or fixed bond that saved me 40% of downfall. However, I made a mistake of putting it back at 8500 thinking that it was low and got 25% down value! Mutual funds are not like stock although they are stocks! It is really hard to decide where to invest. All the five criteria depends on how the economy fairs and whether we are in trough or peak..etc. Blindly investing based on these points will not help. people must know whether we are at high or low, these are changing every six months or one year. Hence, a review about the funds are required every three months once.

For example, when the dow was 14000+, I pulled all the mutual fund to stable value or fixed bond that saved me 40% of downfall. However, I made a mistake of putting it back at 8500 thinking that it was low and got 25% down value!

]]> By: Cale Smith http://www.mint.com/blog/finance-core/how-to-pick-the-right-mutual-funds/comment-page-1/#comment-31809 Cale Smith Wed, 03 Jun 2009 18:17:18 +0000 http://www.mint.com/blog/?p=3465#comment-31809 As you correctly point out, expense ratios do not include all of the costs that are relevant to investors in mutual funds. Expense ratios often understate the true costs - sometimes dramatically. Specifically, they ignore three key costs to investors - trading commissions, taxes and sales charges. According to the Investment Company Institute, the average expense ratio for a domestic actively managed fund is 1.46%. That does not include, however, an average of another 0.27% in fees eaten up by trading commissions. Sales charges, or loads, can also cost up to another 5% in fees, as you pointed out. And a Morningstar study also found that the average mutual fund investor’s after-tax return is almost 2% per year less than the advertised pre-tax return. So, in total, the actual costs to mutual fund investors could be an additional 2.3% to 7.3% on top of the stated expense ratio. That is simply a huge difference investors should be aware of. And turnover and short-term capital gains taxes are both enemies of the long-term investor. As you correctly point out, expense ratios do not include all of the costs that are relevant to investors in mutual funds. Expense ratios often understate the true costs – sometimes dramatically.

Specifically, they ignore three key costs to investors – trading commissions, taxes and sales charges.

According to the Investment Company Institute, the average expense ratio for a domestic actively managed fund is 1.46%. That does not include, however, an average of another 0.27% in fees eaten up by trading commissions.

Sales charges, or loads, can also cost up to another 5% in fees, as you pointed out.

And a Morningstar study also found that the average mutual fund investor’s after-tax return is almost 2% per year less than the advertised pre-tax return.

So, in total, the actual costs to mutual fund investors could be an additional 2.3% to 7.3% on top of the stated expense ratio. That is simply a huge difference investors should be aware of. And turnover and short-term capital gains taxes are both enemies of the long-term investor.

]]> By: Todd http://www.mint.com/blog/finance-core/how-to-pick-the-right-mutual-funds/comment-page-1/#comment-31783 Todd Tue, 02 Jun 2009 16:29:33 +0000 http://www.mint.com/blog/?p=3465#comment-31783 How about transparency? This guy has the right idea http://www.fundmymutualfund.com/2007/07/about-me.html - too bad the regular industry does not believe in it. A few funds update their holdings monthly but most do it on a quarterly basis and even then its 45 days after the close of the quarter. i.e. you have no idea what you own since turnover is so high in most funds nowadays. How about transparency? This guy has the right idea

http://www.fundmymutualfund.com/2007/07/about-me.html

- too bad the regular industry does not believe in it. A few funds update their holdings monthly but most do it on a quarterly basis and even then its 45 days after the close of the quarter. i.e. you have no idea what you own since turnover is so high in most funds nowadays.

]]> By: Hoss Cents Money Magazine http://www.mint.com/blog/finance-core/how-to-pick-the-right-mutual-funds/comment-page-1/#comment-31701 Hoss Cents Money Magazine Fri, 29 May 2009 17:55:15 +0000 http://www.mint.com/blog/?p=3465#comment-31701 For your Canadian readers, Globe Investor provides the same info as Morningstar. Suggest prospectus is a must not may want read. Excellent article which will help the new investor. For your Canadian readers, Globe Investor provides the same info as Morningstar.
Suggest prospectus is a must not may want read.

Excellent article which will help the new investor.

]]> By: FridrihLop http://www.mint.com/blog/finance-core/how-to-pick-the-right-mutual-funds/comment-page-1/#comment-31700 FridrihLop Fri, 29 May 2009 16:13:18 +0000 http://www.mint.com/blog/?p=3465#comment-31700 Good article, the advertisment is sold? Good article, the advertisment is sold? ]]>