Turning Up Mutual Fund Bargains
These simple screens point to good deals among actively managed, no-load stock funds.
Are you still in deal-hunting mode following Black Friday and Cyber Monday? With a little effort, the Premium Screener can help you turn up actively managed mutual funds with solid long-term records and bargain prices compared with similar offerings.
The basic set of criteria involves screening for no-load funds that are open to new investments of $25,000 or less. Adding a fund manager tenure of 10 years or more plus a top-third category ranking for the 10-year trailing period helps point to proven management teams and strategies. The Premium Screener also allows you to exclude index funds, which typically boast expense ratios well below their actively managed counterparts.
Next, the screen must be tailored to a specific group of funds through the Fund Category option in the drop-down menu and through a range of possible expense ratios. The following are examples of three screens that cover domestic large-cap, mid-cap, and small-cap funds. Each screen is set to pull funds that fall into the cheapest quintile compared with similar no-load offerings. So, the domestic large-cap fund screen is set to pull funds with expense ratios of 0.70% or less, while the mid-cap and small-cap screens are set for 0.90% and 0.95%, respectively (large-cap funds tend to have bigger asset bases, which can result in lower costs).
As of Dec. 1, 2009, the Premium Screener pulled the following results:
Because fund expenses come directly out of your fund's returns, cost comparison is a savvy move for fund investors. Premium Members of Morningstar.com can also use the Cost Analyzer tool to compare how much a handful of similar funds cost over a multiyear period. Comparing Dodge & Cox Stock, Homestead Value, and Vanguard LifeStrategy Growth with two egregiously priced, large-cap Analyst Pans, Midas Special (MISEX) and Flex-funds Aggressive Growth (FLAGX), shows how significant the cost difference can be over time. Over a 10-year period, the total costs for the first group add up to approximately $350 to $1,100 on an initial investment of $10,000, whereas investors would have to fork over $3,600 and $4,600 for the lower-returning pans.
Don't have a Premium Membership? You can still use our Premium Fund Screener by taking a free, 14-day trial.
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Karin Anderson has a position in the following securities mentioned above: DODGX. Find out about Morningstar’s editorial policies.