What is best mutual fund family?

[dieselram94]

What is the best mutual fund family? Returns, expenses,longevity, and board members? Any thoughts?

 

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[0121stockpicker]

First of all I'd only buy no load funds. There is no need to pay a broker / planner 5,6,7 percent right off the top.

I'm a big fan of vanguard index funds as they generally have the lowest expense ratios. In the end most fund managers do not outperform the indexes so why pay extra for them. Now you are never going to hit a home run, but these are great conservative funds to accumulate wealth overtime.

All my mutual funds are vanguard index funds. This is just my unbiased opinion.

 

[dieselram94]

I have looked at Vanguard before, your thoughts on this are the same ones I have.

 

[dieselram94]

As for a specific fund how about OAAAX? kind of a hybrid.......

 

[0121stockpicker]

As for a specific fund how about OAAAX? kind of a hybrid.......

Interesting but it looks like you would be paying a 5.75 percent front end load and a 1.2 percent annual fee. Plus this fund invests in other funds so you might get double dipping of the annual expenses??

Now you can build the same "asset allocation" by putting your money in three or four no load index funds these would have no load and annual fees of 0.10 to 0.25 percent. That's good money to be saving year after year after year. Fees can kill you if your investing for ten or twenty years given the compounding effect.

As for the actual fund. It obviously is extremely dependent on your age, objectives, whether its in a non-tax or taxable account, etc, etc.

 

[dieselram94]

What do you think of past returns?

 

[0121stockpicker]

What do you think of past returns?

From 1992 -1996 I worked for a big blue blood Boston based mutual fund company ( worked in the investment banking industry after that). As the disclaimer goes - I don't think past returns have any bearing on future results. Now when a fund does well for a few years the fund company markets the hell out of it and assets flood in that become harder and harder to invest. Also beware of funds touting 5 or 10 year return numbers. Often they had just one huge year which boosts the averaged for multiple years way up. It DOES NOT mean this was the return every year. Beware this is a favorite trick.

What you learn about mutual funds is that one has to look at risk adjusted returns. Many funds kick ass in a bull market and then get destroyed when the market goes down because their portfolio was filled with risky stocks. There are very very few funds that perform well year after year in up and down markets. It's why I prefer just to save my money and index it. Has a broker recommended that you buy this fund?

 

[dieselram94]

I have owned this fund as well as others for about 6 years, about a year ago I called my broker and told him i wanted to stop buying and buy into other funds. He convinced me to still purchase but we agreed on a much smaller amount every month. He liked the "diversity" it provides. As time goes on I am less and less impressed with it....

 

[0121stockpicker]

Understood. And you have to pay him the load/ commission every time you buy. I have nothing against brokers/planners but he has certain funds that he has to sell and certain ones he makes good money selling - so it's not always in your best interest. Every time you buy that fund 5.75 percent goes right into his pocket.

The other thing you can do is buy vanguard fund ETFs that you buy just like a stock. I own the vanguard total market fund (mimics the Wilshire 5000) and the total international fund.

I just think the less you pay others and the more you keep the better. As you said, its not like you feel like you are getting your money's worth for the advice he is giving you.

I don't even use a broker, I just keep all my money Ira and non-IRA at vanguard. I buy their funds and trade stock and write options with them. All with no load and incredible small fees (so more for my pockets).

Always feel free to zip me an email if you want a "second opinion" on what your broker is suggesting". Again, he has to make a living, but broker recommendations are not always in your best interest in my opinion.

Best

Eric

 

[dieselram94]

That is pretty much how I feel. Thank you again and I will be sure to send a message if I have anymore concerns. Thanks ~Dieselram94

 

[bill from lachine]

Eric,

Good advice on the index fund route.....there's very few mutual fund managers out there who can consistently beat the market......Peter Lynch was one, another who comes to mind is Bill Miller with Legg Mason who beat the index for 13 years running....then got his butt kicked since the last meltdown....probably a few others out there but few and far between.

Another little trick you might find useful......let's say you buy 5 different index funds for diversity.....put 20% in each one....since some will under or over perform the others...

Just rebalance every so often to keep the percentages in sync.....this way you're forcing yourself to sell high and buy low....it might help to add a bit more performance to the mix.

Regards + HH

Bill