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This is an old revision of this page, as edited by Paul.Paquette (talk | contribs) at 01:26, 3 January 2006 (→1st Question). The present address (URL) is a permanent link to this revision, which may differ significantly from the current revision.

Should there be a List of mutual-fund families? There are obviously too many funds (and too much churn in the industry) to list them all, but the distributors and sponsors are few enough in number that it ought to be possible. There are at least half a dozen that are interesting or topical enough to be worth an article on their own. (Off the top of my head, that list would include Fidelity Investments, which I've partially done, MFS Investment Management, which I've stubbed, Vanguard Group, and Franklin Resources. Others?) Each article should hopefully describe the structure of the company; interlocking between sponsors, distributors, and investment advisors; and relationships with other firms in the financial services industry and out. 18.24.0.120 04:22, 23 Jan 2004 (UTC)

Why not. T. Rowe Price would be a good addition as well. Lukobe 22:35 PST 23 Jan 2004

Done, with a round baker's dozen families. 18.24.0.120 03:32, 24 Jan 2004 (UTC)

Fund Families

What list is complete without American Funds??? Third Largest Fund Family - best Long Term Consistent Performance, etc., etc....

I've added it. --Lukobe 16:52, 17 Jun 2004 (UTC)

Turnover section

I deleted the following sentence from the turnover section:

In addition, no actively managed fund of any type (including corporations that function like closed end mutual funds like Berkshire Hathaway and Liberty Media) has outperformed the market for more than 40 years, and 99% of them for more than 10 years.

I think it may be valuable information, but I couldn't figure out what the author was meant by it, or its relation to the subject of the paragraph. 18.26.0.18 03:01, 15 Jan 2005 (UTC)

While I am not sure that its exactly true, what it is saying that any type of fund or corporation which acts like a fund, where a guy sits there and tries and pick stocks which he thinks will do well (ie. all non-index funds), have not done as well as if the fund automatically just buys every stock in equal amounts. I do know that in general, this is true for at least 75%. So basically in a way its saying that having guys trying to pick stocks for a mutual fund is stupid.

Fund type articles

Is there any value in the Open-End Fund, Closed-End Fund, and Exchange-traded fund articles that would not be better served by a full comparison in this article directly? Or, conversely, perhaps all of the "Glossary" section should be moved out of this article and into separate articles for each topic? 18.26.0.18 06:06, 15 Jan 2005 (UTC)

Fund ticker template

Hello all. I've just created Template:fund for use when referencing mutual funds inline. An example follows. I hope this is helpful. --ChrisRuvolo (t) 21:27, 2 August 2005 (UTC)[reply] 

[[The Vanguard Group]] has a [[S&P 500]] [[index fund]] {{fund|VFINX}}.
The Vanguard Group has a S&P 500 index fund Template:Fund.

Start your own

Anyone know the process if someone wanted to start there own mutual fund? (aka a business) basic information would be useful in this article.

  • Well you need a group of investors, unless you are filthy rich, after that you need to form a LLC, Trust, or corporation, etc. not limited in what business form, then you need to register probably with the reguatory body in question probably SEC. Hopefully you manage or operate a fund that investors would want.~ Paul.Paquette

Before you offer your opinion

1st Question

To 167.80.244.204, this is to addressing your answer in the recent edit.

  • Previous Edit No load funds have higher average returns than load funds. No load index funds often experience higher average returns than the average mutual fund.
    167.80.244.204 Edit This is patently untrue and there are no performance numbers than can justify such a claim. Again this is incorrect and actually the opposite is true.
  • Here's how, most of the best load funds have very low annual expenses compared to other load and even no load funds from Fido,TRowe and the rest. For example if you had $100K in Large Growth AGTHX (worlds largest mutual fund) and $100K in Large Growth FCNTX (Fidelity's largest no-load fund) and held it ten years (growing at a hypothetical 9% per year), your cost of ownership would be $13.7K for Large Growth AGTHX and $14.2K for Large Growth FCNTX. (For Load fund Large Value AIVSX cost of ownership would be $12.1K!) Go to NASD Mutual Fund Expense Analyzerand see how much each fund really costs...load or no-load.
  • Large Blend VFINX is significantly cheaper...then again one day you might be having breakfast with a SR VP at Vanguard and mention to him that his firm did not give your dad good advice at his retirement...you'll get to hear him joke that "Well when you are paying peanuts, you can only hire monkeys! hahaha, Dad only lost 40% of his retirement money.

Second Question

  • 167.80.244.204 Edit... when the last five-years performance comes into play that number declines to just 55%. A quick look at the Wall Street Journal's monthly "How the Largest Funds Fared" shows that the most popular managed mutual funds trounce the SP 500 performance numbers.
  • Paul.Paquette Largest fund have the most money, because they have a proven track record of success, I not saying you can not beat the relevant benchmark index, but it very unlikely that this will occur from year to year and not all mutual fund should be compare to the S&P 500. Thier are so few people that have an history of outperforming thier indexes even if it is by a 1% point difference for example Peter Lynch,and Warren Buffet the list is so few that it probably encompasses about 20 people. Also remember a rolling 10 year average is more accurate than a rolling 5 year average.

Third Question

  • Previous Edit Volatility also tends to be less in highly diversified no load index funds than the less diversified (typically only about 60 stock) managed funds.
167.80.244.204 Edit Again this is completely untrue, volatility is defined by standard deviation....most of the most popular funds not only significantly outperform the indexes they do so without the volatility.
  • Paul.PaquetteHow do you come upon that insight. When I think of volatility in regard to mutual funds, I think of the high and lows that the mutual fund in question would have in a given period of time. Also the more risk you take i.e having a mutual fund with deriavitives and high-yield bonds (junk bonds) should command a higher return due to the increase in risk.

Paul, that isn't insight, its a simple tool used to assess mutual fund volatility. Use S&P or Thomson Financial tools. These funds all take significantly less risk than, and enjoy significantly smoother hi/lo perfomance than the SP500.

Fourth Question

  • Previous Edit No load index funds often good choices for investors willing to do perform limited research and make their own investment decisions
  • 167.80.244.204 Edit Doing that research will payoff by keeping you away from the mediocre results of the index funds. Please check the total returns for managed funds such as American Funds ICA (AIVSX), Fidelity Contrafund (FCNTX) or Low Price Stock (FLPSX), Lord Abbett Affiliated (LAFFX), Templeton Growth (TEPLX) or Van Kampen Equity Income (ACEIX) to name a few and compare to Vanguard 500 (VFINX).

Paul, have you ever studied how haphazard SP500 turnover runs? Last week three stocxks were added and three removed...look at the list and figure out the philosophy that went into that move....then go back over the past 5 years and look at the +/- list and see if you can discent an investment philosophy (there isn't one). But if you really want to see how capricious the SP panel is take a look at their moves 1998-2001 and you will have a better understanding of the 2000-2002 45% drop!

  • Paul.PaquetteIs that not the idea behind an index fund, in the case of the S&P 500 it hold 500 of leading companies in leading industries of the U.S. economy. Although the S&P 500 focuses on the large-cap segment of the market which represents 80% coverage of U.S. equities. Source. Yes I Agree with you, this is one of the draw back of an index fund, but not all index fund follow that rule thus Passive Asset Class Funds. I admit I not as familiar with the tides and flows of the previous history of the Stock Market, maybe you can elaborate more on what you were talking about. All I know is that the U.S. Economy experience a recession and the Dot.com bubble burst thus a lot of Tech industries lost a lot of money, but before that happen it was experiencing god awesome Rates of Return.
  • Paul.Paquette As you can see the only fund you should be comparing it too is MorningStar LAFFX and as you can see the that mediocre index fund kills it hands down. This just goes to show "Do not compare Apples to Oranges."

Hi Paul; Any of those funds (with the possible exception of FCNTX) would be a solid core investment. In any case you chose LAFFX which was the weakest link. LAFFX outperformed the SP500 by 1.2% a year over the past ten years. It outperformed the SP500 by over 2% a year over the past five years (its owners also didn't suffer through a 45% drop from 2000-2002). LAFFX has been around since 1934. Over those 72 years it has returned an average of almost 12% a year. The SP500 is from 1957, but for sporting puposes lets say the market has returned 10% a year since 1934 (This is general consensus). That 2% per year compounded over 72 years turns into some serious cash! also note that the LAFFX performance numbers assume that the investor paid a full load. Most investors are buying with breakpoints (discounts)...that means LAFFX real performance numbers for its investors are significantly higher. Also please consider that over any rolling 10-year period since 1972 (VFINX) all of the aforementioned funds outperform VFINX, their numbers are just gaudier than LAFFX...and all of them can stretch that outperfomance back to when your grandparents were dating. And beating the SP over rolling 10 year spans is just not that uncommon...evey single equity fund in the American Fund family can say they do it! If you have access to Thomson or S&P at the WKU b-school run hypos...you'll see that what I'm saying is true. What happens is that best money managers do not run ads or pay for PR and they disregard the press...after all they are in the business of running money for serious, intelligent long-term investors, not marketing.

Closing Remarks

You can make all the profit in the world, but it is net profit that matters, I am not going to do the math but if you figure out the net return for each of those mutual funds and compare it to thier relevant index benchmark in question, I be willing to bet that the index fund is higher than thier Actively managed mutual fund counterparts and if they do beat the index fund it only by a few % which make you wonder if the cost was justified.

Paul, on all of these funds a ten year, $10K investment would significantly outperform a $10K investment in the SP500 tracking indexes. Run the hypos and you will see by just how much, but it does make a big difference. The biggest issue in our industry is not passive v active or load v no-load...the biggest issue is transparency (or lack thereof). Other major issues that hurt investors...get rich quick stories (they happen, but not to me or you, unless we get lucky enough to start work tomorrow at some small company that turns huge over the next 10 years!). Performance-based mutual fund ads (and we'll start seeing a ton of them next year. And finally advisors and the brokerages. Some are exceptionally good, but the process means most investors will come across an advisor who will not always and automatically put the client's interest before their own. I hope you will remember this when you get into the biz. You can't go wrong doing the right thing, but you can go home with a lighter wallet some months!

Remember it is easy to pick out the past mutual fund that did well, but the past is not going to make you any money, you have to deal with the future. With all those different kinds of mutual funds out thier good luck in trying to pick out a winner that consistently outperformed thier respective index.

Hopefully you find this helpful Paul.Paquette

Opinion on Main article

Thier is a paragraph under the Load section of the mutual fund article that I personally view as Opinion and conjecture, they offer no links, ect to support thier claim. However I am transposing it on here till proven to the contrary. Comments and Opinions are welcome. Paul.Paquette 18:06, 1 January 2006 (UTC)[reply]

Paragraph in question edited by 167.80.244.204

No load funds have higher average returns than load funds. This is factually incorrect. There has been absolutely no study which would back up this spurious point. The no-load fund industry spends billions of dollars in PR annually to push this bunkum on the yokels, but again the record disproves such a claim. One of the best things to happen to investors in the coming years is that the NASD will spend more time and money to educate individual investors on performance and fees. You don't hire Paul McCartney for your ads for nothing and you don't regale the media whith swag for nothing. A quick look at the NASD's new cost calculator will show you that no-loads are significantly more expensive (over the cost of a reasonable ownership period for equities) than load funds managed by American funds and others. No load index funds often experience higher average returns than the average mutual fund. Again this is untrue. Take a look at the 50 largest mutual funds used by American investors. The Vanguard SP 500 is the largest overall fund interms of assets but in the bottom decile of this group in terms of 5- and 10-year performance. Volatility also tends to be less in highly diversified no load index funds than the less diversified (typically only about 60 stock) managed funds. Volatility is measured by standard deviation. The SP 500 standard deviation is relatively high. It is two to three points higher, or about 20% more volatile than most of the actively managed funds in the top 50. No load index funds often good choices for investors willing to do perform limited research and make their own investment decisions. If you want to believe the stuff that comes from PR firms I've got a war in Iraq I'd like to sell you! If you want to invest to make money then take off the blinders, study and work with ice-cold rationality.

I agree this is opion and conjecture. The view point is negative and opinionated. You can prove nothing by stating "There has been absolutely no study which would back up this spurious point". Unevidenced statements are opinion. If you said XYZ research demonstrates my point, then the reader can verify your statement and form their own opinion. Until you can contribute in a verifiable and espress a NPOV, don't bother. simonthebold 22:58, 1 January 2006 (UTC)[reply]

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