Inferior Mutual Fund Performance

Screen Out Inferior Mutual Fund Performance — BUT ONLY AFTER using other ETF and mutual fund selection criteria

Superior or even average in the past simply DOES NOT predict similar fund performance in the future.

However, the investment research literature does provide some modest evidence that substantially inferior past is more likely to lead to inferior mutual fund returns in the future. Excessive costs and high management expense ratios are the likely culprits, when explaining sub-par diversified investment fund returns.

Choosing solely from among that have performed very well in the past can lead you to very significant mutual fund screening errors

The primary objective of using scientifically grounded mutual fund screening criteria is to identify a much smaller group of for more careful evaluation. Of course, the whole point of screening and ETFs is to increase your chances of investing in funds that are more likely to perform better in the future on both a sustained, long-term basis and on an risk-adjusted investment basis.

As a first step in their mutual fund screening process, far too many individual investors and their financial advisors instinctively start by sorting funds on the basis their superior historical performance. They want to choose only from among those that have performed the best in the past. They hope that superior past performance will continue into the future.

Both this instinct and this mutual fund screening approach can be fatally flawed. Choosing only from among past higher performing diversified investment funds can lead to major mutual fund selection mistakes. These mistakes arrive in many forms, including inferior gross mutual performance, higher management expense ratios, expensive sales loads and marketing fees, and/or higher trading costs due to higher fund turnover.

How smart, but naive, individual investors may choose lousy on the basis of superior past

For example, if you choose a high cost and high turnover five-star fund with a superior, but largely lucky, past record, then you can set yourself up for some real future investment performance troubles. If this record does not continue into the future, then you will still end up paying a high management expense ratio and high, hidden fund turnover trading costs.

You will just to get mediocre future performance on a “gross” returns basis. When higher annual management expense ratio costs, higher hidden trading or turnover costs, and higher short term capital gains taxes are taken into consideration, then the result will be inferior performance on a “net” returns basis. What appeared to be a big winner, when it was owned by someone else, becomes a big loser, when you own this fund.

An additional reason why you might have decided to buy this high cost mutual fund could have been, because you were only sold “superior” . Perhaps a financial advisor selectively offered to you only those with higher past performance and 4-star and 5-star mutual fund ratings. Because you were naively inclined to buy on the basis of past performance, it was much easier for the investment counselor or financial adviser to make the sale to you by suggesting only four star and five star funds.

In the process of purchasing this fund, you may also have paid a substantial front end sales load or back end sales load. If you paid a sales load, then an annual 12b1 marketing fee probably was also tacked on to the annual management expense ratio to pay your financial advisor to “serve” you.

Now, your investment picture gets even worse. Instead of putting 100% of your dollar to work in the investment fund, perhaps only 95 cents will actually make it into the fund to work for you. In addition, the 12b1 fee drives up your annual costs even higher.

You bought this fund, because you earnestly thought you were buying a “better” mutual fund or ETF. It seemed like a good investment, because the past had been better. Furthermore, your financial advisor or investment counselor, actually said that the fund was “better” fund or at least implied that this was a better fund by pointing out its performance chart or its then 5 star rating, which has since faded and lost its sparkle.

Securities sales brokers, investment counselors, and financial advisors get paid more, when you pay them more. That is why they shamelessly tell you or imply that you must buy more expensive diversified investment funds and “pay more to get better performance.” This is unmitigated rubbish.

Investment research studies indicate that superior past simply does not indicate that there will be superior future performance — particularly after higher costs and taxes are considered.

When historical is evaluated carefully in well-designed statistical studies, there is very little evidence that managers of funds with superior past performance will sustain this performance into the future. (ETFs are too new to have a similar body of historical research, but the substantial similarities between and ETFs make contrary findings unlikely.)

Past fund success is simply not an indicator of future success.1 In fact, superior past fund performance seems not to indicate any more than the likelihood that a fund is likely to have average performance in the future. Funds that recently demonstrated average performance in the past are equally likely to have average or superior performance into the future, as well.

Therefore, previous superior or average past does not predict similar future performance. Some average and some superior performing funds in the past will be average in the future and some will do better or worse than the average.

An average or superior past performance chart tells you absolutely nothing to aid you in your mutual fund selection process. However, there is modest evidence that substantially inferior past fund performance is more likely to lead to continued inferior performance in the future. Significant past failure is a mild indicator of future failure.

Given that big past losers have a mild tendency to keep losing, but past winners are likely to be average in the future, these findings should change significantly how one should use historical performance indicators. Instead of starting by selecting only the best past performers, The Pasadena Financial Planner believes that investors are far better served by first applying other much more useful mutual fund selection criteria.

Before evaluating past , use the first 6 of these 7 objective mutual fund and ETF screening criteria.

These 7 screening criteria can help you to screen the tens of thousands of available diversified investment funds to get down to a more manageable list of diversified investment funds to evaluate. The first 6 mutual fund screening criteria below will yield a much shorter diversified investment fund list.

Only then, should an investor use historical performance measures to evaluate the screened list and only then with the sole objective of eliminating those funds that have had a history of sustained and significant under performance. The investor can then use the web and other sources to research in greater depth the remaining funds on the screened list – whether or not their prior performance has been average or superior. Just eliminate any funds with substantially inferior past performance from this smaller diversified investment fund list.

Note that in reality however, after you have knocked out funds with 1) sales loads and 12b1 fees, 2) high management expense ratios, 3) high turnover and trading costs, 4) large actively managed funds, 5) immature funds, and 6) small inefficient funds, you are relatively unlikely to have any funds remaining that have substantially inferior past performance. Since these other six mutual fund screening criteria are inversely correlated with lousy , you are very likely to have already eliminated the past performance dogs. as well.

1) The Best Mutual Funds Have NO Sales Loads and NO 12b-1 Fees

The great majority of investors buy funds through financial advisors, and they pay a very, very high price over their lives for doing so. This is especially true, since financial advisers tend to promote funds with higher costs that reduce . Zero is the maximum amount of front-end load and back-end load fees that you should to pay. Zero is the maximum marketing or 12b-1 fee you should pay. Just say no. Buy no load directly without using costly advisers.

2) The Best No Load Mutual Funds Have VERY LOW Management Expenses

Lower annual ETF and mutual fund management expense ratios are better. Lowest is usually best. Many no load index funds and ETFs have management expense ratios below .25%. Favor them.

3) The Best Noload Mutual Funds Have VERY LOW Portfolio Turnover

Lower portfolio turnover is better. Look for single-digit and very low double-digit annual portfolio turnover rates in the and ETFs that you purchase.

4) Avoid Large Actively Managed Mutual Funds

When they trade their overly large portfolio positions, large actively managed funds tend to affect securities market prices negatively. This drags down their net . High turnover by large funds should be a big red flag to you.

5) Choose Mature Mutual Funds

The ETF and mutual fund industry throws a whole lot of new fund spaghetti on the wall to see what will stick. You do not want to be part of this process. Pick more mature that have been in business for at least a few years.

6) Avoid Very Small Mutual Funds

Small funds cannot operate efficiently. They need a minimum critical mass of assets to fund required management expenses. Simply avoid very small funds under one hundred million or two hundred million dollars in assets.

7) Screen Out Inferior Mutual Fund Performance

Evaluate the historical investment performance of and ETFs, but only AFTER using other screening criteria. Superior or average past fund performance tells you ABSOLUTELY NOTHING about how a fund will perform in the future. Pay attention to the fine print in the prospectus that says that past performance does not indicate future performance, because this has been shown to be true.

Modern, highly competitive, and real-time securities markets are auction price setting mechanisms that force the mass of smart and not-so-smart professional and amateur investors to accept largely average returns over time. Only very poor past performance tends to indicate potentially sub-par performance in the future, and that is probably due to higher costs. Therefore, eliminate only the worst of historical performance during fund screening and choose from the remainder — despite whether a fund has had superior, average, or even somewhat below average performance in the past.

Net of costs, four and five star funds are no better than three star funds and probably no better than even two star funds. Eliminate the bottom one-tenth to one-third of funds on a historical performance basis and choose from the remaining nine-tenths to two-thirds without stressing their past performance. Instead, choose with very low costs and turnover. (Also, see: Do Morningstar Ratings predict risk-adjusted equity mutual fund performance?)

1) Mark M. Carhart “On Persistence in Mutual Fund Performance.” The Journal of Finance, 1997, Vol. LII, No. 1: pp 57-82

Avoid Large Actively Managed Mutual Funds

Big mutual fund portfolio positions and higher percentage ownership of any company’s stocks and bonds are not good for actively managed .

These big positions and high percentages are not good for your personal investment portfolio either. Large size constrains how a fund can trade and how efficiently it can do so. When an actively managed mutual fund becomes very large, it must manage its trading exceptionally well, or it will suffer significantly higher transactions costs, which tend to cause lower net . The need to balance short term securities market trading supply and demand will drive up trading costs for actively managed .

There are some extremely large . For example on January 26, 2007, Morningstar, Inc. data indicated that the total net assets of the largest U.S. domestic ranged from $161.9 billion for the largest mutual fund to: $45.0 billion for the number 10 US mutual fund, $25.1 billion for #20, $19.0 billion for #30, and $14.3 billion for #40.1

Only a few of these very large stock and bond and ETFs were passively managed no load index funds.

The rest were actively managed . All share classes for each fund, including share classes with front end loads and back end loads, were grouped together for these total asset numbers. While exchange traded funds (ETFs) are a much newer investment vehicle than , their characteristics are more similar than different.

In general, individual investors can use and ETFs interchangeably, if they follow the “7 Ways to Pick the Best Noload Mutual Funds and ETFs” The largest U.S. diversified domestic ETF held $85.1 billion and the 10th largest exchange-traded fund held $10.9 billion.2

Keep in mind that the large investment portfolio size issues and the market impact issues discussed in this article are much more significant concerns for actively managed . They are not as important for no load and for ETFs that track passively managed market indexes. This is simply because very large do far less trading.

Because of how ETFs are constructed, the ETFs that have been introduced thus far for purchase by individual investors tend to be indexed and therefore more similar to passively managed . Unfortunately, the vast majority of ETFs on the market now track relatively narrow sector index benchmarks. This leaves undesirable industry sector volatility in your portfolio, when compared to broader based market indexes that diversify across all market segments.

The composition of an ETF’s portfolio is transparent and known to the market on a daily basis. Portfolios of actively managed are only known publicly a few times a year. Therefore, mutual fund portfolio composition becomes public long after trading changes have been made.

Given this exposure of an active ETF’s trading strategy almost in real time, there is concern that other traders in the market might front run an actively managed ETF. This has slowed the introduction of actively managed ETFs, although some are coming to market. Nevertheless, there already are some ETFs that do reconstitute their portfolios periodically and these ETFs can be viewed as quasi-actively-managed.

With no load index funds, the target composition of their portfolios can be known through the benchmark index.

The composition of a particular no load index fund may vary from the index, but usually only by a small amount. The target portfolio composition changes only when the publisher of the underlying bond or stock market index changes the composition of the index. When the index changes, then must make changes, and this can have a market trading impact. Adverse market impact raises transaction costs and lowers net mutual fund or ETF performance.

Is there a maximum stock and bond mutual fund size of actively managed that might affect investors’ welfare negatively?

A larger fund can afford more analysts and can increase the number of different company securities that it holds. However, there are practical limits. The size of the positions held will also tend to increase. Very large size can push some funds into investing only in companies with very large market capitalizations.

Many of these very large funds become defacto index funds, because their holdings tend to replicate a large portion of the benchmark securities index, while they charge higher fees and more often deliver inferior net performance after their added investment expenses and costs.

With so much money to invest, it is not practical for these fund giants to track companies with smaller equity market capitalizations or debt issues. Many giant have enough assets to buy smaller companies in their entirety.

However, all diversified investment funds are constrained from doing so by laws and regulations — even if they wanted to so. For example, funds must avoid certain concentrated positions (e.g. not holding more than 5% of a company’s securities) that would jeopardize their legal standing as diversified management companies and their corporate tax exemptions at the fund management company level.

Even if they stay within these legal ownership limits, very large actively managed fund size inevitably increases the fund’s percentage ownership of the securities that it holds. A notable issue faced by very large and by large actively managed is the “market impact” of the fund’s trading activities.

If the fund tries to buy or sell large positions in individual firms over short periods, the fund can adversely affect the market price of that security temporarily. When large funds buy or sell, there must be sufficient trading volume on the other side. A sufficient volume of trades by others with contrary opinions of a company’s prospects must be available. If not, the market bid/ask price range must adjust temporarily to encourage others to enter the securities markets to trade.

Trading induced changes in securities prices can significantly drag down the net investment performance of very large actively managed .

In addition, mid-sized can also suffer adverse market impact. If the positions traded by mid-sized funds are substantial relative to the total available short-term trading volume, they will also suffer negative market impact. Nevertheless, this market impact problem tends to be the more acute with larger funds.

Given these considerations about the size of very large actively managed , you might wish to limit the maximum size of the actively-managed mutual fund or quasi-actively-managed ETF, in which you would be willing to invest. You might decide that you are not willing to put your money into funds that exceed perhaps $10 billion or $5 billion in assets or even less. There is no magic excess size threshold. Nevertheless, you should be aware that you can still choose from numerous funds with assets under $10 billion or $5 billion that still meet the other screening criteria from the “7 Ways to Pick the Best Noload Mutual Funds and ETFs.”

Many monster-sized actively managed receive heavy publicity.

You should keep in mind that your familiarity with the brand name of a mutual fund or with the names of mutual fund companies does not mean a larger fund is “better” than a smaller one whose name you may not recognize. In fact, because of the problem that investment portfolio performance could be worse for large and very large actively managed , well known brand names might deliver worse performance over the long term.

If well recognized actively managed mutual fund brand names attract excessive asset inflows, this will cause higher trading costs, greater “market impact,” and other investment management problems. In addition, the portion of their portfolios held in cash can increase, and you will get charged the same high management expense ratio for the cash, as well as, the stock and bond holdings.

Familiarity or lack of familiarity with a mutual fund brand name should not be considered when you screen funds initially. Brand awareness often is simply an indicator of a fund family’s higher marketing and advertising costs that fund shareholders tend to pay one way or another. If other screening criteria indicate that a fund could be attractive, the fact that it is an unfamiliar fund should have absolutely no bearing on whether you decide to do more investigation of an unfamiliar mutual fund — preferably a no load index fund.

Understand that large mutual fund portfolio size is a far, far greater concern for actively managed managed funds than for passively managed and ETFs that track bond and stock market indexes.

Very large passively managed index funds do far less trading, because they trade only to invest net inflows or to redeem net outflows. In contrast, large actively managed funds incur much higher trading costs in pursuit of better returns, which raises the hurdle than they must get over just to break even on these attempts.

With an actively managed mutual fund, for example, the mutual fund manager or managers can simply decide to change the composition of the investment portfolio and incur the trading cost and market impact. Every mutual fund manager hopes to gain more than the incremental trading costs, when they do this.

Of course, when all these collective buy and sell decisions are made, fund managers are more likely to be wrong than right. They have no crystal balls about what will happen to securities market values in the future. For every securities buyer there must be a seller and for every securities seller there must be a buyer. Actively managed mutual fund portfolios get rearranged, trading costs go up, and total net performance must come down.

If you are considering investing in a very large actively managed mutual fund, you should think about the alternative of investing in a noload mutual fund that targets the same index benchmark.

No load index funds do significantly less trading through their buy-and-hold strategies. They have a lower likelihood of a performance shortfall due to their market trading impact. Of course, index fund expenses should be substantially lower, which is also much more likely to improve net investment performance.

As mentioned above, when an actively managed mutual fund’s size grows very large, its portfolio holdings may also move closer to the composition of the market index. There is strong evidence that the portfolios of most very large, large, and even medium sized actively managed closely resemble the composition of the passive indexes against which their performance is benchmarked.

However, the annual percentage expense ratios of these actively managed funds are far higher than the annual percentage fees of passively managed index funds. Active mutual fund shareholders are charged much higher annual management expense ratios across both the active and passive portions of their portfolios.

In effect, you pay an extremely high asset management fee for just a little active management. This is because you pay a higher management expense ratio across all fund assets, but only a much smaller portion of the investment portfolio is really being managed actively.

Of course, portfolio managers might disagree. Nevertheless, how do they explain the most likely outcome, which is to relatively closely track, but usually under perform the benchmarket? Whatever the reasons or excuses, you can decide if you want to keep paying high fees for closet indexers who under perform.

More often than not individual investors lose, when they hold actively managed . The longer the time period is that investors hold actively managed , then the smaller and smaller the chance is that they will actually “beat the market.” Sadly, this transfer of assets from individual investors to mutual fund companies has continued and has grown for decades. It is well past time for individual investors to wise up!

1) http://screen.morningstar.com/FundSelector.html This is Morningstar.com’s free mutual fund screener. Check the Sitemap for our articles about free online fund screening applications and databases.

2) http://screen.morningstar.com/ETFScreener/Selector.html This is Morningstar.com’s free exchange traded fund screener. Check the Sitemap for our articles about free online fund screening applications and databases.

The Best No Load Mutual Funds Have VERY LOW Investment Management Expenses

A high ETF or mutual fund management expense ratio can only be justified, if an investment fund earns even higher net returns that compensate for these higher expenses.

Sadly, this is most often NOT the case with costly actively managed equity and bond and with high cost exchange-traded funds (ETFs). In addition, you have no reliable way to tell beforehand which actively managed fund will return more than its added costs. With a passively managed index fund, you are highly likely to get an investment return that is close to the securities market return less your costs.

A higher management expense ratio will tend to cause an actively managed fund to trail the return of index funds. Therefore, your chances of picking a supposedly superior actively managed fund are greatly reduced. Even in the short run, only a minority of actively managed perform well enough to compensate for their higher investment management expenses.

In the longer term, even fewer actively managed stock and bond funds will beat the market, because “superior” short-term performance is mostly due to luck rather than to skill. Luck tends not to last. When the performance evaluation time period gets longer, then there are fewer and fewer actively managed with net performance that is better than a passively managed index fund targeting a market return. Actively managed are simply not reliable vehicles to plan for your family’s long term financial needs!

The average actively managed mutual fund manager demonstrates some skill, but the added costs swamp this additional investment return.

Certain scientific studies have demonstrated that some professionally managed equity seem to exhibit a modest level of apparent skill in their ability either to choose stocks and bonds and/or to manage their stock and bond portfolios. These mutual fund managers may be slightly better stock pickers, and/or they may have better portfolio management practices.

In managing their portfolios, these mutual fund managers may not make the behavioral mistakes that many individual investors do. Examples of behavioral investment mistakes are holding on to losers too long and selling winners too quickly.

Scientific finance studies have demonstrated a very slight persistence in stock price trends for some, but not all equities. This persistence could benefit portfolio managers who hold their winners longer and sell their losers more quickly. Evidence of superior skill for bond fund manager seems entirely lacking, so buying no load bond funds is very clearly a better strategy.

Most professional investment fund managers have expertise, but efficient market competition tends to make them all mediocre in the long term.

Just because scientific finance studies do not support buying actively managed stock and bond funds on a net returns basis, this does not mean that professional money managers are not skillful. To the contrary, the level of professional expertise in portfolio management at most fund companies is very high. However, unlike American schools and colleges, the real-time securities markets have built-in grade and achievement deflators.

On average, the markets deliver C level returns before costs. If your costs are lower, you are more likely to get an A or B. If your costs are higher, you are more likely to get a D or F. The major factor that adds to all the confusion is that market participants must put a current, risk-adjusted value on the future economic prospects of their potential investment holdings.

These highly uncertain predictions make securities market prices highly volatile. After the fact, market participants will eventually be graded on the future value impacts of currently unknowable future events. Some investment fund managers will be lucky, while others will not be in the short run. In the long run, their investment fund manager performance usually averages out.

Minor, short-term skill demonstrated by some active professional investment fund managers, perpetuates the completely spurious active management versus passive management “debate.”

From the perspective of the individual investor, this tired active management versus passive management “debate” or argument is simply and completely irrelevant. Scientific finance studies have the advantage of being done after the fact, and they use large sets of historical investment fund performance data to see what actually did happen. Some studies provide continuing fuel for self-interested industry promoters to keep saying that actively managed provide value.

However, without a crystal ball, individual investors instead face the daunting task of trying to pick some of the few future winners out of a very large crowd of investment fund managers who will not provide a positive net return. The active management debate implies that after all the additional management expense ratio costs, mutual fund trading costs, higher capital gains taxes, and extra time are taken into account, investors are supposed to have some crystal ball to sort future winners from losers.

Nobody has such a crystal ball. The closest approximation to a crystal ball that is available is the simple rule to only buy very low cost and ETFs. All very low cost and ETFs are passive investment funds.

The investment fund management industry keeps pointing to past performance and Morningstar ratings as predictors, when superior past performance and 4-star and 5-star ratings are completely useless predictors. Instead lower costs and lower turnover are far superior predictors of future .

Even the scientific studies that demonstrate some professional skill, do not show that this incremental skill justifies paying the much higher fees of active funds. On average, actively managed funds simply do not have sufficiently higher returns to cover even their higher direct management expense ratios.

The research shows that added management expense ratio costs typically outweight added performance by about 2 to 1 or 3 to 1. And, this does not even count the higher trading costs and the deadweight loss that individual investors are subjected to when they pay investment sales loads and 12b1 fees!

How is that for an “active” mutual fund or ETF investment return?

Spend 2 or 3 or 4 dollars more to get a dollar back! Waste your valuable time trying to figure out which funds will demonstrate better performance. Take the risk that you could pay far more and still end up picking one of the worst rather than one of the “best” actively managed funds, after the results are in. Do this over and over across your lifetime. Sounds fun, huh?

Did you know that one investment research study on growth demonstrated that there was a 12 to 1 ratio between the cumulative returns of the best performing growth mutual fund to the worst performing growth mutual fund over the 19 year period from 1976 to 1994?? (See: Edward S. O’Neal, “How Many Mutual Funds Constitute a Diversified Mutual Fund Portfolio?” Financial Analysts Journal, March/April 1997: 37-46)

Sound ridiculous to you? For the slimmer chance of winning the investment manager selection lottery, do you want to roll the dice and end up with a terrible fund or a series of terrible funds instead? Perhaps this is not the best way to plan your family’s financial future.

Why bother listening to this completely self-serving securities industry “debate,” when you can simply buy very low cost, broad market index and ETF, and then get on with your life? Do you really want the pleasure of spending a lot of time in your life listening to one financial advisor after another tell you that a succession of expensive investment funds are “better”? Then, do you want the excitement of watching these “better” funds perform over time, when they are far more likely not to be better as time passes and as your portfolio is harmed?

Furthermore, higher active transactions costs are most often hidden and left out of the comparison, even though higher active fund trading costs can will drag down net returns for higher turnover funds. Also, these studies usually do not account for increased taxes paid by individual investors caused by active trading. Finally, they do not measure the opportunity cost related to an individual investor’s extra time spent on futile, ongoing efforts to pick “superior” funds that most often will not be.

An individual investor is far better served by choosing from among the numerous passive, noload and exchange-traded funds that have decided to compete on low costs.

Obviously, a decision rule that focuses on lower fees will strongly favor passively managed index funds over actively managed funds. You will have more choices than you need, if your restrict your investment fund choices to those passively managed and ETFs that are trying to attract individual investors’ money by charging very low fees. Low cost passive investing is one of the fundamental essentials of investments for those who want to adopt a smart investing strategy. When choosing between load or no load , there is no comparison. Cut out the expenses, including advisor sales loads and fund management expenses, and you end up with passively managed index funds that are much more likely to deliver better risk-adjusted returns. This is simply one of the basics of investing.

When screening and ETFs, you should first set a relatively stringent upper limit on the annual expense ratio that you are willing to pay. With passively managed domestic index funds, .5% annually is an overly generous upper limit. Many domestic index funds are available with management fees under .25%. Because of their variety, it is not as easy to generalize about screening international and global index funds. However, much lower management expense ratios should still be the key screening rule for these non-US funds.

With actively managed , you first really should ask yourself whether you have a valid reason for still preferring them over passively managed index funds. If you still have a good reason to select an actively managed fund, which most individual investors will not have, then you should still seek lower management expense ratios among active funds. You might start screening with an upper expense ratio limit of .75% and then move lower. Obviously, you should also amortize any sales loads that you cannot avoid. Again, however, there is never a good reason to pay a front end sales load or back end sales load. There are many better noload available for you to buy directly from no load mutual fund companies.

The Best No Load Mutual Funds and ETFs

How to Select the Top No Load Mutual Funds and ETFs

Given the extremely large number and variety of stock – equity, bond – fixed income, and equity and ETFs, investors need a rational basis to select among them. For example, there are over 60,000 different mutual fund investment share classes sold worldwide. Some and ETFs must be better than others, but which ones are they? How can you tell before the fact?

Without scientific selection criteria and a good understanding of which factors are more or less likely to increase your long-term risk-adjusted investment returns, you will make erroneous decisions based on false assumptions. The most obvious mistake that individuals make is to extrapolate past performance into the future. Superior past performance has simply not been shown to be a reliable predictor of superior future performance.

Low Costs Lead You to the Best No Load Fund

Financial industry sales people and investment advisors promote high cost with superior past performance, because they are easier to sell to naive investors. Furthermore, most investment advisors and financial sales people themselves do not know any better. The financial services companies that they work for do not teach them about the findings of the investment research literature.

Instead, they teach their “financial advisors” how to sell investment products quickly — whether or not these investments really are the best and ETFs from the point-of-view of their clients. The cycle of performance chasing goes on endlessly. In the process, it damages the long-term financial success of millions upon millions of individual investors around the world.

Mutual fund sales loads and 12b-1 marketing fees reduce your long-term investment performance. These investment sales commissions dramatically reduce the size of your long-term investment portfolio. The true costs of mutual fund sales loads and mutual fund 12b1 fees are far larger that most investors understand. Furthermore, financial advisors and commissioned securities sales people almost always promote and ETFs that are more expensive. You pay more to buy these funds and you pay more in the long run, because with sales loads and 12b1 fees are more likely to come up short in comparison with low cost no load index funds.

Buy Low Cost No Load Mutual Funds and Hold Them for Years

Investors want to select the best bond and equity and ETFs to hold for a long duration. Most would also like to invest additional amounts automatically into these funds over time without worrying about whether they do or do not own the best available. Most individual investors do not want to spend their precious personal time constantly figuring out which other to switch to. (Note that a minority of investors very actively and repeatedly switch between . Dalbar’s studies have show that the long-term performance of frequent switchers is simply terrible, when compared to long-term buy-and-hold investors.)

Also, buy-and-hold mutual fund and ETF investors usually are much less concerned about short-term fluctuations than they are about achieving their longer-term investment capital appreciation goals. Such investors want to use mutual screening or selection criteria to identify the best and to minimize the need for frequent changes due to inferior . Individual investors are better served, if they understand what the scientific investment literature says about potential selection criteria. Therefore, a series of articles the Pasadena Financial Planner discusses fund selection criteria that have a firm basis in scientific investing. Click on the Sitemap link to find them.

7 Ways to Pick the Best Noload Mutual Funds and ETFs

Scientific Criteria for Selecting Top No Load Mutual Funds and the Best Mutual Funds and ETFs

People simply want to invest in what they hope will be the top no load and the best noload and exchange traded funds (ETFs). They want selection criteria that can lead to a higher probability of doing better in the future on both a sustained and risk-adjusted investment fund performance basis.

With real lives to lead, people who are not professional investors just want an efficient, but effective fund identification process. They want to pick the best mutual funds and ETFs that will make their investment assets work for them. They do not want to have to “work for” their assets by spending large amounts of time monitoring and repeatedly changing from one mutual fund or exchange-traded fund to another.

Millions of individual investors run futile hamster wheel races pursuing the illusion that the superior past performance of funds and individual securities will lead to superior future performance. The Pasadena Financial Planner has written these articles for those of you who want to stop “chasing your personal finance tail” and get on with your real life. Of course, it is difficult to stop running in a personal hamster wheel, unless you are convinced that there is better approach that you can implement yourself with relative ease. This article and this website should be good news to you, because it provides a better way for you to find the top no load and the best and ETFs.

Low Cost No Load Index Funds and ETFs Simply are Better

Taken as a whole, the vast body of investment research studies show that there really are better approaches to buying and owning and ETFs. You do not need to frantically chase fund performance. Performance chasing simply does not work.

The vast majority of individuals who chase fund performance get results that are far worse than a passive approach. Better performance tends to come to those individual investors who calm down and try to understand what has actually been demonstrated to work in the investment research literature.

Below we introduce seven articles on selection criteria can lead you to the best no load and ETFs to hold for the very long term. In particular, note that you should use the first six selection criteria first. Only then should you look more closely at a fund’s past performance — and then only for the purpose of eliminating the worst historical performers. Read these seven articles for all the details!

In addition, if you want to use these 7 selection criteria to find the top no load and the best noload and ETFs on your own, you need some automated tools. Free ETF and mutual fund screening tools and free mutual fund databases would be a good thing. To find the best and ETFs, of course, you also need access to automated fund screening applications that have accurate and up-to-date data sets. The Pasadena Financial Planner has also written about screening applications that you can use free on the web. Click the Sitemap to find these articles.

The Best Mutual Fund Selection Problem — Solved for Individual Investors

This “Best No Load Mutual Funds” website provides two very key parts of the mutual fund and ETF selection puzzle for individual investors! The 7 scientifically based selection criteria introduced below provide rational fund screening rules.

These 7 screening criteria and the information provided on this website about free online investment fund screening tools can help you to winnow down the tens of thousands of available investment funds. As a result, you can reduce the selection problem down to a much more manageable number of funds for you to evaluate more carefully prior to investing. You do not have to pay high fees to an expensive financial advisor who will tell you to pick expensive funds with better performance that most often will turn out to be mediocre or worse in the long term.

Read the summaries below, and then click on the links for more information about these 7 scientific no load mutual fund and ETF selection criteria.

1) The Best Mutual Funds Have NO Sales Loads and NO 12b-1 Fees

The great majority of investors buy funds through advisors and pay a very, very high price over their lives for doing so. You simply do not need to pay hefty sales commissions (loads and higher annual expense ratios) to financial advisers who will only offer to you those funds that will pay them these hefty sales commissions.

When you pay someone’s sales commission who only tells you about expensive , you shoot yourself in both feet. First, you pay for inferior inferior advice. Second, you end up living with fund expenses that kill a substantial portion of the growth of your personal investment portfolio.

All mutual fund sales commissions and marketing fees can be avoided entirely by buying from the many mutual fund families that will sell fund shares directly to the public without such fees. ETFs will inevitably involve brokerage commissions, so always use discount brokers. Then, do not trade ETFs. Instead, sit tight with a very long-term buy-and-hold strategy to amortize these exchange-traded fund trading costs.

This investment fund selection criterion is very simple. Zero is the maximum amount of front-end load and back-end load fees that you should to pay. Zero is the maximum marketing or 12b-1 fee you should pay. Just say no.

2) The Best No Load Mutual Funds Have VERY LOW Management Expenses

Lower investment management fees are better. Lowest is best, and the lowest means passively managed index and ETFs. Since there are numerous funds with annual expense ratios below .25%, look there first.

The higher the annual fund expense ratio the more you should question why you should pay such higher expenses. Paying more tends to lead to inferior rather than superior performance net of you overall investment costs and capital gains taxes.

3) The Best Noload Mutual Funds Have VERY LOW Portfolio Turnover

Lower portfolio turnover is better. Higher turnover increases hidden fund transactions costs, which tend not to be recouped through better performance. Look for single-digit and very low double-digit annual portfolio turnover rates in the no load index funds and ETFs that you purchase.

4) Avoid Large Actively Managed Mutual Funds

When they trade their overly large portfolio positions, large actively managed funds tend to affect securities market prices negatively. This can only drag down their net fund performance. The more they trade, the worse it tends to get. High trading costs suck value out of the mutual fund portfolio, and these costs are on top of the management fees that you pay directly.

High turnover by large funds should be a big red flag to you. If you avoid actively managed funds altogether, then your concerns about excessive fund size can be greatly reduced. Very large index funds need to manage their trading impact, but their turnover is far lower than actively managed funds.

5) Choose Mature Mutual Funds

The ETF and mutual fund industry throws a whole lot of new fund spaghetti on the wall to see what will stick. IF a new fund has a lucky streak, individual investor assets and “advised” assets come running their way. This is new fund success — at least success for the fund company.

However, when you invest in a very new fund, and it fails to grow, the fund is very likely to die or to be eaten. Rarely do lousy young and ETFs fold and refund money. Why confess incompetence and give back assets that could still yield fees?

When new funds do no attract enough assets, these “failed” funds (and your invested and diminished assets) most often will get merged into other funds. Unfortunately, new failed funds tend to get merged into larger funds with noticeably inferior historical performance.

Fund companies do not want to take any of the luster off the of their currently hot funds. Therefore, your money gets tossed into a bigger dog or just average fund. To avoid participating in this frenetic new fund infanticide process, only pick funds that have been in business for at least a few years.

Three years is probably enough. Mutual funds are like dogs in some respects. They grow up in just a few years. However, if they get caught in traffic at the wrong time on “The Street,” they may get run over or be eaten by a bigger dog.

6) Avoid Very Small Mutual Funds

Small funds cannot operate efficiently. They need a minimum critical mass of assets to fund required management expenses. Simply avoid very small funds. One or two hundred million dollars is probably the minimum. A higher minimum would also be fine, since there are still many larger funds to choose from that would meet these other criteria.

7) Screen Out Inferior Mutual Fund Performance

Evaluate the historical investment performance of and ETFs, but only AFTER using other screening criteria. Superior or average past fund performance tells you ABSOLUTELY NOTHING about how a fund will perform in the future. Pay attention to the fine print in the prospectus that says that past performance does not indicate future performance, because this has been shown to be true.

Ignore all the fund industry’s selective marketing of only their past winners. Individuals need to move beyond their naive and flawed notions about historical investment performance.

Modern, highly competitive, and real-time securities markets are auction price setting mechanisms that force the mass of smart and not-so-smart professional and amateur investors to accept largely average returns over time. Only very poor past performance tends to indicate potentially sub-par performance in the future, and that is probably due to higher costs. Therefore, eliminate only the worst of historical performance during fund screening and choose from the remainder — despite whether a fund has had superior, average, or even somewhat below average performance in the past.

Net of costs, four and five star funds are no better than three star funds and probably no better than even two star funds. Eliminate the bottom one-tenth to one-third of funds on a historical performance basis and choose from the remaining nine-tenths to two-thirds without stressing their past performance. Instead, choose no load index funds with very low costs and turnover.

Passive, low cost, noload index usually have higher risk adjusted performance

If you evaluate the investment research literature, you will find that buying passive, low cost, noload index and ETFs are far more likely to lead to higher risk adjusted investment performance over the long run. You can help to break the cycle of frequent fund buying and selling. You can get off the performance chasing hampster wheel that the securities industry wants you to keep running on for your entire life.

Securities sales people and financial advisors get paid more, when you pay more. That is why they shamelessly tell you that you must “pay more to get better performance.” This is complete rubbish. The investment research literature says the opposite. Pay less and get more.

Push the button — get some cheese. Tell naive investors to pay more — get some expensive cheese and some big bonuses. That is why rats and financial sales people keep hitting their buttons. When rats push the button, they get cheese. When financial salesmen push the button, they get paid very well.

Unfortunately, you end up being the one who pays them. If they really understand the investment research literature — and most securities sales people do not — then they just hope that you will never figure it out. Or, you might not realize the problem until years later, when your personal investment portfolio is much smaller than it could have been.

However, if you have already figured out the problem, then these 7 selection criteria offer you a better solution and a relatively easy way to pick the top no load and the best and ETFs. Become a proactive and extremely cost-conscious consumer of financial and investment products today!

A useful low cost noload mutual funds and ETFs book

One of the best investing books that can help you to lower your portfolio fees, lessen your investment risk exposure, and increase your retained investment returns

lowest cost index mutual fund personal finance book

This article reviews a no load funds investment book that is one of the most useful personal investment books you will find. Named Low Cost Mutual Funds and ETFs, this investment education book addresses the biggest challenge that many personal investors are confronted with: investing fees which are much too excessive.

Also, the book provides a clear and easy to understand description concerning what works regarding individual investing strategies, and it summarizes straight forward how-to information. With this book it is easy to find the lowest cost index and exchange-traded funds.

This book lists the 212 very lowest cost no load index in 30 different asset categories, plus it lists 208 very lowest cost ETFs in 27 separate categories. All these lists are screened with factors supported by academic investment research that are explained in this useful investing book. These top no load funds and ETF lists offer a full spectrum of low cost no load mutual fund and ETF choices for any investor.

This very useful book of over 250 pages was written and researched by Larry Russell, who is an experienced financial advisor in Pasadena, California who has degrees from MIT, Brandeis University, and Stanford University.

The problem with long term investments: The great majority of investors pay far too much in investing fees and costs and receive far too little in exchange for these costs

Charging individual investors extremely high for its purportedly greater insight, the vast majority of the financial services industry really just feeds on the returns and assets of individual investors without contributing net positive value. In a nutshell, you are simply a financial services industry revenue and profit center.

The investment industry makes the investing process overly and unnecessarily complex, by flooding the market with complex investment products and services that are unjustifiably expensive. Then, the investment industry provides self-interested and biased “free advice” on selecting investments, and this is the most costly “free advice” naive investors will receive in their lives. Without looking for less expensive investment services and products, such as the listed in theis book, investors are far more likely to receive recommendations to buy these excessively costly securities services and products.

Unjustifiably expensive securities products and services are your real enemy as you invest. The more that you allow the financial industry take from you, the less your family will have. Keep your assets. You do not have to participate in this unfair game.

With the help of this Low Cost Mutual Funds and ETFs investment book you can quickly reduce your long term investment fees, reduce your portfolio risk, and enhance your retained investing earnings. Reducing your investing fees down to the bone is the most significant investment strategy available to you.

For decades, inexpensive noload and more recently lowest cost exchange-traded funds have produced better returns accounting for risk. After taxes and costs have been accounted for, investors simply hold on to more of their investment return. In addition, investors who buy lowest cost index funds reduce risk, expend much less effort, are not subjected to pressure sales tactics, experience much less hassle, plus save time on their retirement investments.

You can make your own investments directly with investment funds, and you can a better job of it. All you need is correct investment information. For some absolutely straight investment eductation information on what actually works with individual investments get this book.

Information about the top no load funds and ETFs in this investment education book

lower cost mutual fund finance book

This investing book provides lists of 212 lowest cost noload and 208 lowest cost ETFs in 30 and 27 separate classes, respectively. Included noload and index ETFs are characterized by having no sales loads, no marketing charges, and the lowest management fees. In addition, included index funds have significantly reduced investment portfolio turnover which is associated with lower securities trading expenses.

The listings of noload  and ETFs cover:

  • Global, international, and US multi-cap, large-cap, mid-cap, and small-cap stock investment funds with low costs with growth and value equity investment funds
  • US, global, and international long-, intermediate-, and short-term government, treasury, corporate, municipal, and inflation protected fixed income investment funds with low costs
  • Money funds and real estate funds with low costs

With this book you can select a lowest cost retirement investment portfolio which is fully diversified by investment asset class and geography

Your savings with this useful noload investment book

Depending upon how big your portfolio is, this modestly priced investment education book would save you hundreds or thousands of dollars year in and year out. If you lower your total long term investment expenses and costs by just a single percent of assets a year and you have a no load mutual fund investment portfolio of $10,000, your investment savings will be $100 per year. If you have $50,000, you would save $500 each year. If you have $100,000, you would save $1,000 per year. Because total annual investment fees and expenses paid by the average individual investor add up to between 2% and 2 & 1/2% a year, the great majority of investors would in reality save two percent annually. Therefore, these annual investing savings on total fees and expenses savings could be double per year — across their entire lives.

Some might think: “Sure this is what I could save, however when I spend more, I would receive higher investment yields.” Sorry, unfortunately financial research clearly will not justify paying more in costs for either sales load or no load bond funds. These are just a few financial research quotes from this book:

  • “109 of these 111 comparisons indicated that higher bond expenses meant lower returns.”
  • “Annual under performance of the broker-sold funds at $4.6 billion dollars…and $9.8 billion in 12b-1 fees … other distribution fees such as loads.”
  • “The inferiority of active investment strategies … across the various countries, when the time horizon increases active strategies are increasingly inferior.”

If you actually think you will receive better investment return, when you pay increased fees versus reduced expenses, then you really do need to get and read this important investing book! This added investor education information helps this to be one of thebest books on investing out there.

Summary of author’s background

top ETF personal finance book

This individual investor book, by Lawrence Russell has been written with his objective and in-depth knowledge concerning what really works in personal financial practices and retirement investment methods. He is a knowledgeable fee only financial planner in the Pasadena and LA, California area. His stated objective is “to improve people’s knowledge and improve their capability in managing their own finance and long term investment situations.”

Larry is the author and publisher of many personal finance publications on the web and the designer and developer of automated home lifetime financial planning software. Across decades, Larry has extensive knowledge in finance, economics, investments, taxation, accounting, probability, statistics, software development, and web technologies. Over twenty-five years, he worked as an executive and manager in the software industry with firms like Sun Microsystems and Hewlett-Packard.

Retiring from the industry in 2001, Larry started a systematic and in-depth reading of the research literature that affected retirement investments and financial planning for his own interest. To make this research literature better available for individual investors, during 2003, he started to author and publish finance and investments academic research article summaries on his oldest how to invest money education website, The Skilled Investor. From 2003, Larry has authored and published in excess of 1,000 investments and personal finance postings across a half-dozen of his personal finance and investing sites. A portion of this personal finance book was drawn from these web articles, and links provided in this ebook enable you to explore his investing and personal finance websites.

Also in 2003, Larry started to develop sophisticated and highly customizable do-it-yourself lifetime financial planning software. This investing and personal finance software worksheet, VeriPlan, was developed at the beginning to serve as a personal finance decision support application for financial advisory customers. In 2006, he started to design and develop an individual user configuration of VeriPlan which home individuals can use themselves. VeriPlan is now the most sophisticated and highly customizable do-it-yourself life cycle personal finance software that is available on the public market for much less than competitors investments and personal finance software tools.

(Investing book cover watering can photograph taken by Alan Cleaver on Flickr.com)

Top Ten Large Cap Value Funds with Low Costs

Low expense ratio, top ten large cap value

This investing analysis covers much lower expense large cap value . In this summary, we consider the top 10 large cap value , which have much lower investment fees compared to the average large cap value mutual fund. The primary goal of this report is to list lower expense large cap, no load value , since lower investment management expense ratios are key, when you are choosing the best large cap value funds. This investment summary explains the reasoning.

Top ten large cap value with the lowest investment fees

  1. Vanguard Value Index – Admiral
    • 0.14% — annual management expense ratio including 12b-1 fee (if any)
    • n/a — taxable account minimum investment
    • VVIAX — ticker symbol
  2. Vanguard Value Index – Investor
    • 0.26% — annual management expense ratio including 12b-1 fee (if any)
    • $3,000 — taxable account minimum investment
    • VIVAX — ticker symbol
  3. Vanguard Windsor II – Admiral
    • 0.27% — annual management expense ratio including 12b-1 fee (if any)
    • n/a — taxable account minimum investment
    • VWNAX — ticker symbol
  4. American Beacon Large Cap Value AMR
    • 0.36% — annual management expense ratio including 12b-1 fee (if any)
    • n/a — taxable account minimum investment
    • AAGAX — ticker symbol
  5. Vanguard Windsor II – Investor
    • 0.38% — annual management expense ratio including 12b-1 fee (if any)
    • $10,000 — taxable account minimum investment
    • VWNFX — ticker symbol
  6. Fidelity Large Cap Value Enhanced Index
    • 0.45% — annual management expense ratio including 12b-1 fee (if any)
    • n/a — taxable account minimum investment
    • FLVEX — ticker symbol
  7. Dodge & Cox Stock Fund
    • 0.52% — annual management expense ratio including 12b-1 fee (if any)
    • $1,000 — taxable account minimum investment
    • DODGX — ticker symbol
  8. Invesco Van Kampen Growth and Income Y
    • 0.63% — annual management expense ratio including 12b-1 fee (if any)
    • $250 — taxable account minimum investment
    • ACGMX — ticker symbol
  9. Invesco Van Kampen Comstock Y
    • 0.64% — annual management expense ratio including 12b-1 fee (if any)
    • $250 — taxable account minimum investment
    • ACSDX — ticker symbol
  10. Invesco Large Cap Relative Value Y
    • 0.69% — annual management expense ratio including 12b-1 fee (if any)
    • $250 — taxable account minimum investment
    • MSIVX — ticker symbol

Best large cap value with much lower investment expenses

Lower cost investment funds tend to do a superior job of serving the financial interests of investors. More costly investment firm funds cut into returns, because these higher costs continually pull on average investors’ handbags and wallets year after year.

This listing of minimum cost top 10 large cap value funds is ranked with the lowest cost investment funds first. Nevertheless, all of these value investment funds have relatively low costs. See the notes below to learn more how the list was determined.

Value will usually not track broad stock market performance closely and, instead, will tend to move contrary to the overall market sometimes. However, the financial research literature indicates that is you are going to chose between a large cap growth mutual fund versus a value mutual fund “tilt” to a stock portfolio, at least, historically a “value tilt” has achieved better cumulative long-term performance.

While the lower cost funds on this list tend to have quite low turnover, their turnover and trading costs will be higher than a fully passive Top 10 S&P 500 index fund that targets a broadly diversified US stock market index return. So pay attention to turnover in addition to all other factors that are relevant to you.

Notes about how this no sales charge investing funds list has been formulated.

Lists of very low cost investment funds usually are relatively unchanging and stable across time. The rationale is very understandable and straightforward. When an investment fund family competes with very low cost investment funds rather than with more risky and more costly tactically active trading strategies, then that investment fund firm strategically usually intends to keep competing on lowest cost investment funds. When that investment fund firm markets passively managed, low fee, and low turnover index funds, that company most often will continue offering similar products.

However, information on this listing of much lower cost investment company funds could have become different after this investment summary was edited, and it is your personal responsibility to check any data and information, prior to making any kind of financial decision.

These are our mechanical database selection processes that were used to develop this list of these very low cost investment firm funds:

  • DATABASE SELECTION PROCESSES: Our mechanical data base selection processes were employed on large investment fund databases which were thought to encompass essentially all of available investing funds.
  • SELECTING LOW COST NO LOAD INVESTING FUNDS IS THE PRIMARY OBJECTIVE: The main objective was to identify very low cost no sales load investing funds. This listing of these very low cost no load investment funds was selected to try to exclude those investment company funds assessing sales fees which are either front-end loads, level loads, or back-end sales loads. This investment fund listing also has attempted to remove those investing funds which assess 12b-1 sales fees, although these 12b1 fees sometimes can be hard to determine.
  • SCREENED INVESTMENT FUNDS OFTEN ARE PASSIVE INDEX INVESTMENT FUNDS: Because low cost noload investment funds usually are passive index funds, they also usually have far lower securities portfolio turnover versus the higher securities portfolio turnover characterized by non-index tracking, tactically active funds. Lesser asset turnover is correlated with lesser asset brokerage and trading fees and costs. Screened funds are very often passively managed index tracker funds, as such much lower cost investing structures are unable to fund such more risky and more costly active investment strategies.
  • FUND PERFORMANCE HISTORY TENDS TO BE MUCH LESS RELIABLE THAN SELECTING LOWER COST NOLOAD INVESTOR FUNDS: Regarding ETFs and investment fund performance, too many amateur individual investors follow fund performance history hoping to find the top performing in the future. Doing this tends to be an inferior strategy, because fund performance history is much less useful than picking low cost no sales charge index investment firm funds that are characterized by low fees, low turnover, and passive management.
  • LOW COSTS ARE WHY YOUR PORTFOLIO CAN EARN ENHANCED INVESTMENT FUND PERFORMANCE: If you buy very low cost no load index investment company funds, their innately low costs are the fundamental reason why your investments can obtain higher level index fund performance and ETF exchange traded securities performance yields. When you purchase lowest cost index investor funds, then expect to obtain ETF exchange traded products and mutual fund returns that track the underlying diversified index minus the lower costs you need to pay and a relatively small error in tracking the index.
  • TOTAL ASSET VALUE AND INVESTMENT FUND AGE: Regarding the total assets of these lowest cost investment funds and time that they have been in existance, most hold a minimum of a hundred million dollars of total invested assets and have been operating a minimum of three years.
  • AVAILABLE TO ADDITIONAL INVESTMENT ASSETS: Most of these much lower cost investing funds were open for additional money at the time of writing. These investor funds might be accessible to investors either via directly bought funds, though low cost stock brokers, or solely via an institutional plan open to particular investors. Probably the better method to find out about how to invest in any of these low cost investing funds is to perform a search using your favorite search engine with the investment fund name and investment fund ticker symbol.
  • ZERO DUE DILIGENCE, EVALUATION, OR ANALYSIS: Solely numerical data base selection processes were employed. Absolutely No due diligence, evaluation, or analysis of any kind was performed with any of the investor funds.

Statistical securities investing research reports compellingly prove that lesser cost investment expenses are strongly contributory toward higher level investment fund plus ETF exchange traded products performance yields. The financial asset trading marketplace isn’t a safe place for the average investor to attempt to get better returns with more active but necessarily more expensive investing stratagems which usually will lead to inferior returns.

As a matter of fact pro active asset managers usually won’t get better returns once their greater investment fund management expenses, higher trading expenses, plus higher investment taxes are calculated. The greater the investment firm management expenses, trading fees, and investment taxes, the lesser the net investment performance returns to investors. Investment fund asset managers can’t capture sufficiently high performance returns to counterbalance their increased management fees, brokerage costs, and taxes. Intrinsically, these increased and unwarranted investment management expense ratios, brokerage costs, and trading taxes make ordinary investors receive poorer real investment returns. Ordinary investors spend more and take home less.

To get more financial reports that discuss the increased and unjustified management fees, brokerage sales fees, and trading taxes associated with investment funds read these investing research studies:

IMPORTANT: Our listing of the investment firm funds has been compiled by using numerical data base screening methods which removed investment company funds which didn’t meet the selection criteria listed previously. Zero analysis, evaluation, or due diligence of any sort has been done on any of the investment funds on this list. Our list of investment firm funds is only for your convenience. This list is NOT a solicitation or offer to sell securities, is NOT an offer of any financial services, and is NOT investment advice. This list may not be complete. There could be errors with this information and data and it could be out of date. Also, there could be errors in or problems with the underlying databases, the automated data base selection methods used, and/or the editing, publication, and transcription. It is entirely and solely your responsibility to verify all and any data and information, before you make any personal financial decision.

No Load Mutual Funds

  • The Best No Load Mutual Funds Have VERY LOW Investment Management Expenses ( A high ETF or mutual fund management expense ratio can only be justified, if an investment fund earns even higher net returns that compensate for these higher expenses. Sadly, this is most often NOT the case with costly actively managed equity and bond mutual funds and with high cost exchange-traded funds (ETFs). In addition, you have [...])
  • Vanguard Index Mutual Funds Versus Vanguard Managed Funds ( Go to Part 2: Vanguard Mutual Fund Investment Newsletter >>>>>>> This two-part article: 1) summarizes a recent research report that compared Vanguard's passively managed index mutual funds with Vanguard's actively managed mutual funds (The title of this study by Abel Rodriguez and Edward Tower is "Do Vanguard’s Managed Funds Beat Its Index Funds?" provide links to it [...])
  • Choose Mature Noload Mutual Funds ( Investing in more mature stock and bond mutual funds and exchanged-traded funds (ETFs) allows you to evaluate the historical consistency of a fund's record. On average, the future portfolio returns of more mature funds are probably no more predictable than for very young funds with a similar style or strategy. However, the record of accomplishment of [...])
  • Screen Out Inferior Mutual Fund Performance ( Screen Out Inferior Mutual Fund Performance -- BUT ONLY AFTER using other ETF and mutual fund selection criteria Superior or even average mutual fund performance in the past simply DOES NOT predict similar fund performance in the future. However, the investment research literature does provide some modest evidence that substantially inferior past mutual fund performance is more [...])
  • Dan Wiener’s Vanguard Mutual Fund Investment Newsletter Promotion (<<<<<< Go to Part 1: Vanguard Index Mutual Funds Versus Vanguard Managed Funds. In this second part of this two part article, we discuss an email promoting a mutual fund newsletter that some of my clients forwarded to me, attempt to understand certain rather exceptional investment performance claims for this investment letter, try to reconcile these performance claims [...])
  • Lower Trading Costs (Almost all investors are sensitive to both investment returns and investment risk, and need to pay attention to a variety of factors that could affect their securities holdings. When you buy stock shares, you are buying ownership in the underlying corporation. Of course, it is always prudent to do your research on the corporation, before [...])
  • Top Ten Large Cap Core Mutual Funds with Lower Costs (Lowest expense top 10 large cap core mutual funds This financial report discusses very low cost large cap core mutual funds. In this article, we enumerate the top ten large cap core mutual funds that have much lower investment fund management expense ratios than the typical large cap core mutual fund. The key objective of this summary [...])
  • Top Ten Large Cap Value Funds with Low Costs (Low expense ratio, top ten large cap value mutual funds This investing analysis covers much lower expense large cap value mutual funds. In this summary, we consider the top 10 large cap value mutual funds, which have much lower investment fees compared to the average large cap value mutual fund. The primary goal of this report [...])
  • The Best Mutual Funds Have NO Sales Loads and NO 12b-1 Fees ( Sales loads and other 12b1 fees just pay financial advisors to recommend more expensive mutual funds and ETFs There is no good evidence that investment sales loads and other 12b-1 sales fees charged to investors result in higher mutual fund and ETF performance. In fact, the opposite has repeatedly been shown to be true. Mutual funds have [...])
  • The Best Noload Mutual Funds Have VERY LOW Portfolio Turnover ( Higher mutual fund turnover means higher securities trading costs, which reduce investment fund performance. Short-term mutual fund trading is a zero sum game played against other very well informed mutual fund traders and other securities market traders. On average, higher mutual fund turnover is far more likely to result in lower investment fund performance -- instead [...])
  • Top Ten S&P 500 Index Funds: Large Cap Core Mutual Funds with Lowest Costs (Very low expense ratio, top ten S&P 500 index funds This investment report discusses lowest cost S&P 500 large cap core index mutual funds. In this summary, we consider the top 10 S&P 500 mutual funds that have lowest investment costs compared to the typical large cap core mutual fund. The primary goal of this article is [...])
  • Best No Load Mutual Funds ( To find the best noload mutual funds, you need to avoid the common wisdom, because the common wisdom is not wise at all. Predominantly people chose mutual funds on the basis of past performance. Investing is not that simple. In other aspects of their financial affairs, people need to be wise as well. For example, when they make credit card applications, they should [...])
  • Avoid Large Actively Managed Mutual Funds ( Big mutual fund portfolio positions and higher percentage ownership of any company’s stocks and bonds are not good for actively managed mutual fund performance. These big positions and high percentages are not good for your personal investment portfolio either. Large size constrains how a fund can trade and how efficiently it can do so. When an [...])
  • 7 Ways to Pick the Best Noload Mutual Funds and ETFs ( Scientific Criteria for Selecting Top No Load Mutual Funds and the Best Mutual Funds and ETFs People simply want to invest in what they hope will be the top no load mutual funds and the best noload mutual funds and exchange traded funds (ETFs). They want selection criteria that can lead to a higher probability of [...])
  • Top Ten Large Cap Growth Funds with Low Costs (Lower Cost top ten large cap growth mutual funds This financial summary covers very low cost large cap growth funds. Within this article, we enumerate the 10 best large cap growth mutual funds that have lower investment fees compared to the average large cap growth fund. The primary goal for this summary is to identify lowest expense [...])
  • About ( An Objective Website About the Best No Load Funds This website has been researched, written, and published independently. To ensure objectivity, no compensation of any kind has been paid by any third party to influence the editorial content of this website. All articles on this website were written by the Pasadena Financial Planner. Start a conversation [...])
  • The Best No Load Mutual Funds and ETFs ( How to Select the Top No Load Mutual Funds and ETFs Given the extremely large number and variety of stock - equity, bond - fixed income, and equity mutual funds and ETFs, investors need a rational basis to select among them. For example, there are over 60,000 different mutual fund investment share classes sold worldwide. Some [...])