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Computerized Investing > Second Quarter 2013

AAII Investor Guides

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by CI Staff

As a member of AAII, you are free to access any one of our guides at any time on AAII.com. These guides are updated throughout the year; recent guide updates include the Tax Guide and the Top Mutual Funds Guide. The Tax Guide was updated detailing changes in new tax legislation and the Top Funds Guide shows performance as of the end of 2012. To navigate to AAII Guides, click on the Getting Started tab at the top of the home page at AAII.com, then click on Investor Guides from the submenu. In total, 10 guides are available on the AAII website for members. Here, we highlight the AAII Tax Guide, the Top Mutual Funds Guide and the Guide to Exchange-Traded Funds.

AAII Tax Guide

New tax legislation was signed into law at the start of the New Year, approximately 2½ weeks after AAII sent the 2012 Tax Guide to the printer for the AAII Journal. The new law permanently extends some provisions of the prior tax law that had expired at the end of 2012 and establishes new rules for high income earners. AAII’s online Tax Guide has been updated to include all the changes to tax laws made in the American Taxpayer Relief Act of 2012; it is accessible at www.aaii.com/guides/taxguide (Figure 1). The Tax Guide provides tables charting the tax rates for capital gains, qualified dividends and income brackets; child tax credits; marriage penalty relief; and exemption amounts for alternative minimum tax (AMT) and estate taxes. Tables cover the tax years 2012 and 2013.

In addition to all of the data provided in the Tax Guide, a link to an interactive Tax Forecasting Worksheet is also available. The worksheet allows users to input income, adjustments and deductions and calculates an estimated balance due (or refund expected) for the tax years 2012 and 2013.

Top Mutual Funds Guide

Mutual funds are designed to help investors diversify their portfolios without having to spend the time on choosing and tracking individual stocks. Mutual funds are typically actively managed and usually have higher expense ratios than exchange-traded funds.

The mutual funds included in AAII’s Top Mutual Funds Guide are all no-load and low-load funds that are readily available to individual investors. The guide covers 1,560 funds and can be found at www.aaii.com/guides/mfguide. Five performance tables are included: Table 1 lists the performance of common index benchmarks, Table 2 summarizes average performance and risk of fund categories, Table 3 compares the performance of the 50 most widely held funds (Figure 2), Table 4 lists the 50 best-performing funds of 2012 and Table 5 lists the 50 worst-performing funds of 2012. A unique risk-adjusted return table is also available.

In the individual fund listings, funds are grouped by category and listed alphabetically within each category. The listings provide information on a variety of return and risk data, portfolio composition, and fees and expenses. The listings can be viewed online or downloaded into Excel.

If you would like to request a copy of a fund prospectus and annual report, telephone numbers and website addresses of the fund families are also provided.

Guide to Exchange-Traded Funds (ETFs)

In contrast to mutual funds, exchange-traded funds usually track an underlying index and many ETFs are not actively managed (some are). Typically, expense ratios for ETFs are lower than those for actively managed mutual funds. ETFs provide a great choice for investors looking for exposure to certain sectors or industries that are difficult for the individual investor to research.

Be sure to keep in mind your financial goals, diversification needs and risk tolerances when selecting an exchange-traded fund.

Once asset classes and categories are determined, the AAII ETF Guide can help you find appropriate exchange-traded funds. Most funds are named based on their underlying index (e.g., SPDR S&P 500 tracks the performance of the S&P 500 index). The construction of the underlying index has a significant impact on the fund’s performance: For example, Exxon Mobil Corp. (XOM) has a far larger weighting in iShares S&P 500 Index (IVV), which tracks a capitalization-weighted index, than it does in Guggenheim S&P Equal Weight (RSP), which tracks an S&P 500 index that weights all components equally.

The ETF Guide found at www.aaii.com/guides/etf-guide covers nearly 1,500 funds. Again, funds are listed alphabetically by category, and you can view the lists online (Figure 3) or download an Excel spreadsheet.

In Case You Missed It: Recent Online Exclusive

A new CI Online Exclusive was posted to the Computerized Investing website since the last quarterly issue.

In February 2013, Joe Lan, CFA, wrote “Tax Preparation Services.” He provides an in-depth review of three of the best tax preparation services available: TurboTax, H&R Block and TaxAct. These services are still available through a CD, but are each also available completely online, which is the most convenient and quickest way to file your taxes. The online exclusive details the strengths and weaknesses of each service and should help you choose a tax service during tax season.

To receive notifications of new postings at the Computerized Investing website, subscribe to the free CI Email. In addition to announcing newly posted content, the email reviews websites and shareware programs, reports on smartphone apps of interest to investors and discusses tech gadgets for the enthusiast in all of us.

Sign up for the weekly CI Email at www.aaii.com/email and look for it in your email inbox every Saturday.


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