Comparison: Mutual Fund Screening & Analysis Services
by Cara Scatizzi
Investing in mutual funds can be a cost-effective way to own a diversified portfolio. Selecting and managing a portfolio of individual stocks and bonds can be very time consuming, making mutual fund investing more attractive.
However, its easy to feel overwhelmed when looking for mutual funds because there are currently over 18,000 different funds in existence. It can be difficult for investors to choose a fund that fits their investing goals, needs and expectations. For those who prefer to make these decisions without the help of an adviser, mutual fund screening software and Web sites provide the necessary tools.
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Mutual Fund Screening
Taking the time to find a fund that suits your needs can be beneficial in the long run. This is where mutual fund screening comes in. Our comparison looks at six disk-based software programs and 11 Web sites that offer mutual fund screening services. These services can ease the burden of finding the right fund to invest in.
Screening involves choosing a set of criteria to find a group of funds with similar characteristics. While a basic screening process can be performed using a financial newspaper, magazine or book, the screening process is most easily and thoroughly accomplished using a computer.
Software programs often have high-powered and highly flexible screening capabilities. Subscribers receive periodic data updates, usually monthly or quarterly, without which a software program is of no value. Software programs can be costly, but for investors desiring more statistics, data and control to create unique and in-depth screens, it may well be worth the extra money.
Web-based screening tools have made mutual fund screening more accessible and effortless. The software is either downloaded to your computer or the screening criteria are established through forms on your Web browser. Also many of the Web-based services are free.
With a mutual fund screening system, investors can find multiple funds that meet personal risk, return and management style requirements quickly and easily. For example, if you determine that your portfolio is lacking international equity diversification, a screening service can provide you with a list of no-load, internationally oriented mutual funds with consistent performance above the average for international equity funds, acceptable risk and below-average expenses.
It is important to select a system that provides a wide variety of criteria for screening and has the flexibility to create effective screens. Adding more criteria to a screen or tightening the range of values allows fewer funds to pass.
The number of funds in the programs database, the number and types of criteria that can be used for screening and sorting, and the flexibility of the conditions and values that can be specified for each criteria are all important things to consider and compare between programs.
Once a screen has been run and a handful of funds remain, investors should always spend time analyzing the individual funds before making investment decisions.
Performance Comparison
The ability to compare a funds performance with that of other funds, indexes and benchmarks is a powerful tool offered by many of the software and Internet services. While performance comparison is primarily done through screening, one great feature of a mutual fund screening system is the ability to present the comparison results in user-friendly charts, graphs and tables.
Sophisticated charting functions, reports for specific time periods and reports comparing funds all help make investment monitoring easier and more comprehensive. In the most powerful programs, the performance of an index, an average for a fund investment objective, and the performance of other similar funds can all be displayed in color along with the performance of a particular fund using line graphs and bar charts for any period selected. Some applications even offer basic mutual fund portfolio management capabilities.
Fund Universe
A comprehensive data set should cover the universe of non-money market mutual funds, currently exceeding 18,000. However, this total includes mutual funds with multiple class offerings. Multiple-class funds, which provide the same basic portfolio, are divided into various offerings segmented by fee structures or in some cases by minimum initial investment requirements.
The disk-based services tend to offer a larger database of funds for screening. The Mutual Fund Expert programs from Steele Systems have the largest fund universe with over 18,000, while Indexfunds.com and Business Week Online offer the smallest databases with just over 270 and 5,400, respectively. As far as data is concerned, Steele Systems Mutual Fund Expert Pro Plus offers the most data fields for screening, over 700, while Kiplinger.com has the least with 16.
Alternatively, the universe should match the universe of funds that you consider for your portfolio such as no- or low-load funds. The comparison grid shows the number of funds tracked, the number of data fields available and the number of fields that can be used for screening and ranking for each service.
Frequency of Updates
Mutual fund screening programs and services are typically sold as subscriptions. Update schedules are usually monthly or quarterly, via a new CD-ROM disk mailed to you, or a password for downloading new updates on-line. How much you plan to monitor performance, your desire to screen for new funds and your budget will be the deciding factors when choosing an update schedule. A subscription with monthly updates usually costs more than one with quarterly updates.
The comparison grid indicates the update schedules available for each service along with the associated costs of each. Note that the mutual fund performance data on most on-line services is updated only monthly. Items such as price charts and net asset value may be updated daily, but most other data elements are tied to month-end figures.
Mutual Fund Data and Information
In addition to the database size and frequency of updates, another important feature of any screening tool is the amount and type of data provided for each fund.
The analysis of an individual fund and the examination of fund details hinge on the amount and organization of information presented. Information tends to fall into four categories: performance, risk, fund portfolio information and fund operations and services.
Performance statistics usually include annual total returns and annualized total returns over three-, five- and 10-year periods and longer. Returns for shorter periods—usually year-to-date, one month, three months and the last 12 months—are also common. Performance is also often reported as a difference from an index, such as the S&P 500, or from a category average. Percentile or decile ranks for performance are sometimes used to put the absolute performance differences into perspective.
Risk measures include standard deviation, beta, risk indexes and risk deciles. Risk-adjusted returns using return-to-risk ratios such as the Sharpe and Treynor ratios may be included. Alpha, another risk-adjusted performance measure, and R-squared, a measure of diversification, are usually grouped with beta. For fixed-income funds, average portfolio maturity is usually reported, while some services also report the average credit quality of the bond holdings.
Fund portfolio information can vary from one program to the next, but more often than not it is a brief synopsis. A program might offer details resembling a typical annual report along with calculated portfolio statistics that attempt to capture the portfolio managers investment style and approach. Portfolio breakdowns by percentages provide minimal descriptions of portfolio positions. A listing of top stock holdings with portfolio percentage representation and a portfolio breakdown by sector or industry weights is useful in understanding the funds investment strategy and diversification. The most comprehensive programs also include average price-earnings ratio, price-to-book-value ratio, earnings growth and dividend yield for all stocks in the portfolio. For bond funds, weighted average coupon, maturity and credit rating are reported.
Fund operations and services describe loads, fees and expenses along with fund initial and subsequent investment minimums. You may also find the fund managers name and tenure in addition to the fund telephone number and fund features, such as automatic withdrawal and investment programs.
Distribution Methods
For the software applications featured in this comparison, data updates either arrive on a CD-ROM disk or are downloaded from the company Web site to your computer. The data is installed and stored on your computer and screening and analysis information is at your disposal. With some applications, certain information remains stored on the CD-ROM to keep from overburdening your hard drive. Internet-based screening programs allow you to perform the screen on-line and the results are returned to you in the form of a Web page—most often one equipped with links to quotes, news and other information.
Internet screening utilities usually offer limited screening power and somewhat reduced data sets compared to software. However, some of the recent Web-based entries from vendors provide combinations of detailed data and versatile screening tools. When comparing these options, keep in mind how much data and screening functionality you actually need.
Disk-Based Services
Although CD-ROM-based screening programs are more expensive, the depth of information and flexibility of the program can outweigh the costs for serious investors. The programs have more sophisticated screening capabilities and reporting techniques than their Internet-based counterparts because of large storage capacities.
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Morningstar Principia Mutual Funds
Comparison Grid
Morningstars two mutual fund screening programs, Principia for Mutual Funds and Principia for Mutual Funds Advanced, both have 14,000 funds in their databases and over 150 fields for screening and ranking. A new CD-ROM is sent either quarterly or monthly with each program. Data can also be updated through the Internet.
The main difference between the two is the amount of additional statistical information available. The Advanced version includes Advanced Analytics, which doubles the amount of data on each fund, and extras such as detailed charts and graphs along with historical data dating back to 1970. It also has the ability to print more than 1,700 fund data pages.
The screening tool and primary data fields are identical on both programs. The screening tool is very powerful, yet also very user-friendly. The data fields can be sorted by category or shown in alphabetical order. Each criterion is compared to a user-defined value and the number of funds meeting each criterion is displayed. Once the screen has been run, it can be saved and printed. The passing funds can be exported to Excel as well.
The funds can be ranked by any of the data fields by simply clicking the appropriate heading. Information on an individual fund can be viewed by double-clicking on the fund name. Data reports can be printed on each fund as well. Users can choose to print detailed reports, charts and graphs or essential fund information. The programs help section offers a way to find answers to questions easily and quickly.
The Advanced version is geared more toward professionals and investment advisers, but can be a great tool for individual investors wanting detailed fund data. Both versions offer a wide variety of data and both are powerful screening tools.
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Mutual Fund Expert
Comparison Grid
Mutual Fund Expert from Steele Systems offers three versions: a Personal version, a Professional version, and a Pro-Plus version. Each version has a database of over 18,000 funds, the largest of any program or Internet-based service in this comparison. Updates are issued quarterly or monthly. They are available for download on the companys Web site or are mailed on a CD-ROM disk. The main difference between the three versions is in the amount of data available for screening and analyzing.
All three versions offer user-friendly navigation tools to make the screening process relatively straightforward. Data and charts are prominently displayed in a multi-tab worksheet format and are easy to read. All reports can be customized on your screen as well as printed and exported to other programs such as Microsoft Excel and Word. Predefined screens are available as well.
The quick reference bar adds to the ease of creating new screens and accessing other program features. All of the screening criteria can be compared to user-defined values or any fund or index in the database. The multi-step process for creating new screens may be slightly confusing at first, but a detailed help section assists with sorting out problems.
The Personal version has 92 data fields per mutual fund, all of which can also be used for screening, including performance returns for the last 12 months, four quarters and 10 years, risk measures and necessary portfolio information.
The more advanced Professional and Pro-Plus versions offer 227 and 701 data fields for screening and analysis, respectively. Additionally, the Professional version offers more risk-related statistics—the Sharpe and Treynor ratios—as well as calendar-year and monthly returns for the past 10 years. The Pro-Plus version has calendar-year and monthly returns from 1962 to the present as well as more in-depth risk measures and comparison charts.
Overall, the Mutual Fund Expert programs are excellent mutual fund screening tools. The various subscriptions and program types allow investors with varying goals, ideas and investment strategies to improve their mutual fund knowledge and investing skills.
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Mutual Fund Survey
Comparison Grid
Value Lines mutual fund screening program, called Mutual Fund Survey, has a database of 11,000 mutual funds and over 175 data fields for screening. Subscribers receive a CD-ROM monthly by mail and can download weekly updates from the companys Web site.
The program has a familiar set up with a spreadsheet of all 11,000 funds listed in alphabetical order. To view any of the data points on an individual fund, double-click the fund name. Information is displayed in six categories: general fund information, historical statistics including performance data dating back to 1985, graphs showing investment growth and annual performance, allocation of the assets in the portfolio, the largest holding of the fund and analysis. Any of the data can be exported and printed.
The screening tool is self-explanatory. The first criterias connector is automatically if and all additional criteria can be connected with an or or and. The field name section contains over 175 data fields grouped in seven categories: general information, performance, risk measures, ranks, portfolio, expenses and shareholder data. All criteria are then set to greater than, less than, equal to or not equal to a user-defined value or compared to an index or category average.
Once a screen has been run and saved, the passing funds can be ranked by any of the data fields in ascending or descending order by clicking the column heading. The program also has the ability to calculate the correlation between funds and create custom graphs comparing multiple funds or show individual fund performance results.
Users can also create hypothetical investment illustrations. You can choose tax rates, lump sum or variable contribution and withdraw investments, account for loads and fees and choose reinvestment plans. The program is priced reasonably and is suitable for investors at varying levels of sophistication.
Internet-Based Services
As with most Internet-based services, the sites offering mutual fund screening and data are rapidly changing. Three sites in our last comparison of fund screeners either no longer exist or no longer offer mutual fund screening. Seven sites have been added this year, and many of the returning sites have changed the composition of their services.
All of the sites offer some level of free mutual fund screening service and data. Most sites require that you register with the site in order to use their services. Morningstar continues to be the most popular mutual fund data provider among the sites included here, providing their data services to five of the 11 sites.
Because of the rising popularity of exchange-traded funds (ETFs), this years comparison chart includes an ETF row. A checkmark means the site offers some form of information on exchange-traded funds. Some sites include ETFs in their fund screeners and some have sections devoted solely to ETFs.
While these sites offer convenience, they still dont outrank the available disk-based services in terms of breadth of data and screening flexibility.
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Business Week Online—Mutual Fund Search
Comparison Grid
In addition to the articles and commentary found on Business Week Online, the site also offers mutual fund data provided by Standard & Poors and three types of mutual fund screeners. The mutual fund data is found in the Investing section, which has a mutual fund scoreboard, the latest mutual fund headlines and the fund screeners.
The basic fund screener, called Mutual Fund Search, is powered by Standard & Poors and has 50 data fields for searching criteria. To first narrow what could be a very broad search, you can choose the mutual fund category, fund style or family. In addition to return and S&P rank, you can also search by expense ratio, standard deviation, duration, beta, yield, fund assets and bond fund maturity.
This screener has an Add Row function, which allows users to specify multiple criteria for one data field type—such as assets greater than $100 million and less than $800 million. The screener also lets you sort and rank up to five columns of data. However, if the screen produces a large number of funds, you are asked to narrow the search.
Business Week Online also offers five predefined screens and a Global Funds Screener, which isolates European and international funds in the top 20% of their peer groups. Both programs were developed by and use Standard & Poors data.
The sites mutual fund scoreboard includes over 5,400 mutual funds and 20 data fields showing fund statistics in a chart format that makes comparisons easy.
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CNBC on MSN Money—Deluxe Screener
Comparison Grid
CNBC and Microsoft team up to provide a wealth of free information for investors including portfolio tracking, current market news, and quotes, charts and research on stocks and mutual funds. Searching for a mutual fund by ticker symbol reveals charts, graphs, comparison data, statistics and portfolio information regarding the fund—all in a very user-friendly format.
The site offers two mutual fund screeners: the Easy Fund Screener and the Deluxe Fund Screener. The former is a more condensed and simpler version of the latter with only 12 data fields for screening. The Deluxe version utilizes 80 data fields and has the ability to rank the results by any of the 80 fields; it is an ActiveX program that can only be run on Windows-based systems using Internet Explorer or Netscape. The site offers step-by-step instructions for downloading the program.
The Deluxe screening criteria are separated into nine categories: fund basics, ratings, expenses, performance, statistics, portfolio composition, stock holdings, bond holdings and advisor FYI, which reports items of note for a fund such as a change in its Morningstar rating or a change in fund manager. The criteria can be set to equal to, less than, greater than or near to either a user-chosen or predefined value. Criteria can also be compared to other funds. Multiple data fields can be used in one screen and the screens can be saved. Descriptions of the criteria can be found in a definition box to the right of the screening criteria area. Once a screen is run, results can be ranked, sorted, printed and exported to Excel. Criteria can also be imported into the fund screener. Clicking a ticker symbol shows more detailed data on specific mutual funds.
This sites Fund Matcher allows you to search for funds with similar characteristics to a specified fund by creating a unique mutual fund screen. A handful of predefined screens, called Power Searches, can be used to find top-rated funds, technology funds, no-load funds and more.
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CNN Money—Fund Screener
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The CNN Money Web sites mutual fund offerings pale in comparison to that of other sites, but can still be useful. The free Fund Screener offers a small number of search criteria, only 17, and has a database of just over 7,500 funds. The program is easy to use and, for initial screening, could prove worthwhile. Of the 17 data fields, you can search by category, annualized return (1-, 3-, 5- or 10-year) and portfolio information such as expenses and market capitalization. The results, displayed in a chart, can be ranked by any of the data fields. Links to extended fund statistics are found in the chart.
The site offers basic fund information including standard risk measures, year-to-date and annualized returns and category and index comparisons. The data is updated daily and monthly and is provided by Morningstar. Additionally, a list of the top and bottom mutual funds, updated daily, can be viewed. Access to the CNN Money site and Fund Screener is free.
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Forbes.com—Fund Screener
Comparison Grid
This site is associated with Forbes magazine and offers a handful of tools and research on mutual funds. Although the Fund Screener has a database of over 11,000 funds, it has a limited number of screening criteria and limited flexibility, making it more difficult than other programs to navigate.
To locate the Fund Screener, click on Premium Tools in the Jump drop-down box. Criteria include: fund family, Forbes ratings, performance, portfolio data (price-earnings ratio, turnover, price-to-book ratio, median market capitalization) and expenses. Some of the data fields let you enter a specific number for comparison while others have a set of predefined values for evaluation.
If the screen turns up a large number of companies, the program asks you to narrow the criteria before showing the results. Funds passing the screen can be ranked by any of the 22 criteria in ascending order. There are four sample screens that help you understand how the program works and function as a starting point for creating customized screens.
Overall, the site offers a small amount of statistical information on each fund, about 50 data fields in all. Data is provided by Lipper and updated on a weekly or monthly basis. Access to this site and the mutual fund screener is free.
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IndexFunds.com—Mutual Fund Screener
Comparison Grid
For investors interested in index investing, the fund screener provided by IndexFunds.com is a more concentrated screening tool. With just over 270 funds in its database, this free Mutual Fund Screener includes only index funds. Search criteria include: date of inception, load, price-earnings ratio, and price-to-book ratio. The values used to compare and create screening criteria are predetermined, giving users less flexibility. Results can be sorted by any of the 28 screening criteria.
A separate ETF screener has just over 170 exchange-traded funds in its database and is almost identical to the Mutual Fund Screener. Web site data is updated on a monthly basis and provided by Morningstar. No graphs or charts are available, but a small summary of relevant fund information is presented for each mutual fund.
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Kiplinger.com—Fund Finder
Comparison Grid
Also a free Web site to access, Kiplinger.com has a database of over 15,000 mutual funds. In addition to a free mutual fund screening tool, the site has a fair amount of mutual fund data and statistics. You can find performance data—including historical performance and Lipper category performance—risk measures and portfolio holdings, composition and general information.
The sites mutual fund screener, called Fund Finder, has 16 data fields, 12 of which can be ranked in ascending or descending order. Unlike some of the more advanced screeners, Fund Finder does not allow you to input desired values as criteria. Preset figures are provided—for example, for one-year total return the range is from 0% to 50% in 5% increments. The passing funds are displayed in a chart with additional information including fund manager name, phone number and fund Web site. Links to more in-depth statistics on each fund are also provided.
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Morningstar.com—Fund Screeners
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Morningstar provides users with free access to news, data, reports and simple but helpful investment tools. The site has two fund screeners: a free basic screener with 18 data fields; and a subscription-based screener, called Premium Fund Screener, with over 100 data fields. Both screening services provide access to Morningstars set of predefined screens.
The free Mutual Fund Screener inputs criteria on a separate page from the results, while the Premium Mutual Fund Screener produces results on the same page, after each criteria is entered, making it easier to read and adjust. The premium screener not only offers more criteria for searching, but you can screen for desired results based on user-defined numbers and category and index averages. A great feature available when choosing your own comparison numbers is a chart that shows quartile ranges and averages to help you pick a meaningful value. All screens created with the premium version can be saved for later use. Premium users can also access analyst reports and a weekly newsletter with mutual fund Picks and Pans.
Other useful screening tools include Mutual Fund Quickrank and Most Similar Funds. The Quickrank ranks all funds in a user-defined category by criteria including volatility and total return. As the name would suggest, Most Similar Funds finds other mutual funds that have comparable characteristics and then ranks them from the most similar (10) to the least similar (one) based on portfolio make-up and performance. This service is available only to premium members.
For investors wanting to do basic mutual fund screening, the free screener may suit your needs. If you are looking for a more advanced tool that is not as intricate or costly as a software program, the Premium screener offers the most screening criteria of any of the Internet-based services in this article—and the cost is reasonable.
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Reuters.com—Fund Screener
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Reuters gets its mutual fund data from Lipper, and the site is updated monthly. However, some of the data is updated less often, usually quarterly, and is so noted. The site is free and provides a basic fund screener as well as statistical data on over 16,000 funds.
The Fund Screener is less versatile than others—it has only 17 data fields, most with predefined values to choose from. You can search for funds based on Lipper Leader Ratings, a feature unique to this site. Results can be ranked in descending order by any of the 17 data fields.
The Lipper Research Center, which provides statistical information on mutual funds, offers about 40 different data fields, none of which are advanced measures of risk. The data is fairly unsophisticated, but provides a good starting point, showing straightforward statistics that are easy to decipher and interpret. Any of the sites charts and graphs can be printed. The site also tracks mutual fund news, Lipper Research and top-performing funds.
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SmartMoney.com—Fund Screen
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With one of the largest mutual fund databases and a large number of data fields for screening, SmartMoney.coms Fund Screen is one of the more advanced on-line screening tools. The service is available to members only. Membership costs $5.95 per month or $59 per year.
The screener is very user-friendly and provides descriptions of criteria choices and average values to help you input reasonable comparison numbers. The screen can be run with a large number of criteria that is set equal to, greater than, less than or between a user-defined value or any of the 60 criteria listed.
The results can be viewed in multiple formats; the default format is a table that can be sorted by any of the data fields in either ascending or descending order. A histogram showing all of the results for a chosen criteria or thumbnails of each passing fund is also available.
In addition to a powerful screening tool, the site offers a multitude of statistics and data on funds including return, risk, portfolio information, expenses and purchase information. Another useful feature is the Fund Compare tool, which presents information on multiple funds in an easy-to-read comparison chart.
The site also has a free Fund Finder with a database of 6,000 funds and four data fields. Access to the sites mutual fund data, statistics and articles is free.
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Yahoo!Finance—Fund Screener
Comparison Grid
As with most of the other Web sites, Yahoo!Finance gets its mutual fund data from Morningstar and is free to use. The site offers a large amount of information on mutual funds as well as a free mutual fund screener.
The Fund Screener has 25 data fields for searching including: category, ratings, return, fees and holdings. The passing funds are presented in a chart that can be ranked by any of the 25 fields. Links to a funds quotes, charts, profile, performance and holdings are presented along with a link to compare the fund to different funds.
Although Yahoos Fund Screener is basic, the sites Mutual Fund section offers very comprehensive statistics and data on all existing mutual funds. Related news headlines, historical prices, fund manager information, charts and graphs, risk measures and portfolio holdings can all be found on Yahoo!Finance.
Additionally, you can see the top fund performers for all categories or locate and download a funds prospectus. The ETF Center organizes lists of exchange-traded funds by size, performance, volume or fund family. You can also learn more about ETFs in the Web sites education center.
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Zacks.com—Custom Fund Screener
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As a data provider for other companies and Webs sites, Zacks.com offers a wide range of investment resources. The Custom Mutual Fund Screener has 50 criteria for screening the 12,000-plus funds in its database. Data is organized in categories such as Fees and Expenses and Performance. Screens can be run using multiple criteria, setting them to greater than, less than and equal to and not equal to user-defined values.
The program shows how many funds meet each individual criterion and how many meet all of the criteria, making it easy to adjust when too many or too few funds pass. After a screen is run, you can choose the data displayed on the passing funds from a list of over 60 statistics. The passing funds are displayed in a chart with links to more information about each fund. The screener, however, does not have the ability to rank the passing companies unless the data is copied to an Excel spreadsheet.
The site gives a fair amount of additional information on funds and fund portfolios—over 150 different statistics and data points. There are two basic categories: the profile section shows basic information on a portfolio, such as allocations, holdings and manager information; the performance section gives various past and present performance data. The site also offers articles and commentary on the mutual fund market.
Cara Scatizzi is associate financial analyst at AAII.
