Comparison: Mutual Fund Screening Services
by Cara Scatizzi
Investing in mutual funds can be a cost-effective way to own a more diversified portfolio. Selecting and managing 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 thousands of different funds in existence. And, with the explosion of exchange-traded funds (ETFs), which are funds that trade on an exchange like a stock, there are even more choices. It can be difficult to choose a fund that fits your investing goals, needs and expectations.
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For investors who prefer to make these decisions without the help of an advisor, mutual fund screening software and Web sites may provide the tools necessary to make smart decisions.
Mutual Fund Screening
Finding the right mutual funds for your portfolio may seem like a daunting task. However, 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. These services, both disk- and Internet-based, can assist in easing 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 done 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 might be worth the money for investors who want more statistics, data and control to create unique and in-depth screens.
Web-based screening tools have made mutual fund screening more accessible and effortless. You either download the software to your computer or establish the screening criteria through forms on your Web browser. Recently these on-line screening tools have improved their offerings and now provide flexible screening tools with a wealth of data for free or at a reasonable price.
Mutual fund screening systems allow you to 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 category average, 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 and logical screens. 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 criterion are all important factors to consider and compare between programs.
As with any investment, always spend time analyzing the individual funds that result from a screen 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, the better mutual fund screening systems allow you to view the comparison results in user-friendly charts, graphs and tables.
Sophisticated charting functions, reports for specific time periods and fund comparison reports 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 along with the performance of a user-defined fund using line graphs and bar charts for any period selected.
Also, most of the Web sites and some of the software programs offer portfolio management capabilities, allowing you to track a group of funds and analyze their performance as a whole.
Fund Universe and Screening Criteria
A comprehensive data set should cover the universe of non-money-market mutual funds and, if they are of interest to you, ETFs. Over the past few years, ETFs have exploded in popularity and many programs now offer ETF screening tools or include ETFs in the mutual fund database.
The disk-based services tend to offer a larger database of funds for screening. All but one of the disk-based services offers over 20,000 funds, with Morningstars Principia having the largest disk-based fund universeover 23,000 funds, including ETFs. Most of the Web-based services offer smaller universes; however, Reuters.com offers over 26,000 funds, including ETFs.
Disk-based programs also offer more criteria for screening. Steele Systems Mutual Fund Expert Pro-Plus offers the most data fields for screening in the comparison, over 700.
For a mutual fund screening tool to be of use to you, you must be sure that the universe matches the universe of funds that you consider for your portfolio, such as no- or low-load funds. In the comparison grid (starting on page 12), the section entitled Database Content shows the number of funds tracked and the number of data fields available. The Screening portion details the number of fields available for screening and ranking in each program.
Frequency of Updates
Mutual fund screening software programs are typically sold as subscriptions. Update schedules are usually monthly or quarterly, with new information mailed on a CD-ROM disk, or posted on-line to be downloaded by subscribers with passwords. 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 application along with the associated costs. Note that the mutual fund 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 monthly updates.
Mutual Fund Data and Information
In addition to the database size, the number of data fields that can be used for screening and the frequency of updates, another important feature of any screening tool is the amount and types 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 one-, 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 service to the next, but more often than not it is a brief synopsis. One 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 composition. 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 services, such as automatic withdrawal and investment programs.
Distribution Methods
For the software applications featured in this comparison, mutual fund data updates either arrive on a CD-ROM disc 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.
Internet-based screening services allow you to perform the screen on-line and then return the results 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 included here run under the Windows operating system, but the software providers are non-committal about whether their programs are fully compatible with the new Windows Vista. All are currently working on the issue, but you may want to contact the software provider for more details if you plan to use one of these services with Windows Vista.
Principia for Mutual Funds
Both of Morningstars Principia for Mutual Funds programs offer the largest databases of funds for all of the software programs in this comparisonover 23,000, including about 450 ETFs. Monthly and quarterly updates are sent via snail mail on a CD-ROM. There is no option to download updates, which means data is almost two weeks old when you get the CD.
The main difference between the two Morningstar software offerings is an Advanced Analytics section in the Advanced version that provides about 100 more data points on each fund. Individual fund data is displayed in a pop-up window within the program and is organized into various categories like risk, return and portfolio information.
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Both versions include annualized performance data, comparisons with indexes and categories, the funds percent rank, calendar-year returns for the last 10 years, various risk measures and tax-adjusted return data. The Advanced Analytics data includes charts, graphs and more in-depth performance, risk and portfolio composition data.
The screening tool and primary data points are identical in both versions. The module is easy to use and you can organize screening criteria alphabetically or by categorytype, performance, risk, portfolio and operationsand more specific subcategories. Criteria can be compared to user-defined values, and the number of funds passing each criterion is shown. You can save screens for later use, as well as export data.
Funds can be ranked by any data point in the program, and custom views can be created and saved with ease. Data reports are available for each fund that include essential fund information and a variety of charts and graphs. A detailed Help section offers plenty of advice on using the program. The Advanced version is a great tool, but is geared more toward professionals and investment advisors. The standard version has a wide variety of screening data and individual fund data that will suit most individual investors needs.
Mutual Fund Expert
Comparison Grid
Steele Systems offers three versions of its Mutual Fund Expert software: Personal, Professional and Pro-Plus. Once again, this is the top pick for fund screening and database software for many reasons, including its large database, flexibility of screening criteria, and user-friendly interface. Each version has a database of over 21,000 funds (including about 400 ETFs), an increase of 3,000 funds from the last comparison. Updates are issued on a monthly or quarterly basis and can be installed either via a CD-ROM disk that is mailed to you or via a download from the Steele Systems Web site.
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The screening tool is relatively straightforward, but the program offers detailed materials in its Help section. The Personal version has 95 different data points for each fund, all of which you can use for screening, including various risk measures; performance returns for the last 10 calendar years; total and average returns for 12 months and three, five, and 10 years; as well as important fund information such as portfolio composition and fees.
The Professional version has 229 fund data points and fields for screening including monthly returns for the last 10 years, additional risk measures such as the Sharpe ratio and annualized standard deviation, and more detailed portfolio information.
The 714 data and screening fields found in the Pro-Plus version include monthly and calendar-year returns since 1962 and more in-depth risk measures and comparison charts.
Unfortunately, none of the versions shows the number of funds passing each of the individual screen criterion, which can be useful for tightening or loosening parameters.
Individual fund data is organized by various categories on a left-hand menu bar. Data is displayed in an easy-to-read format and charts are brightly colored. Data can be printed and exported to Excel and Word.
Overall, Steele Systems offers great tools for investors of any level. For many investors, the Personal version offers enough data for screening and research at a reasonable price. Each program is easy to use and on-line data updates are usually made available within a week of the month-end.
Mutual Fund Survey
Value Lines Mutual Fund Survey offers the smallest database among the software programs in this comparison (just over 12,500 funds and no ETFs) and less funds than many of the Web sites mentioned as well. Still, the versatility of the screening program, the in-depth criteria and fund data, and the ability to download weekly updates add to the programs appeal.
Both monthly and weekly updates can be downloaded from the Value Line Web site with a password. The program provides over 175 data points for each fund, including various performance measures such as annualized returns for one, three, five, 10, 15, and 20 years; various risk measures; and portfolio composition information such as the funds largest holdings.
The screening tool is easy to use, and criteria can be compared to user-defined numbers, various indexes and any of the screening criteria. Users can save screens for later use and export passing funds lists. Passing funds are listed behind the screen creation pop-up window along with the number of funds meeting each successive criterion. This makes it easy to tighten or loosen the criteria if too many or too few funds pass the screen.
While Value Line offers seven predefined views to choose from, it doesnt allow you to create your own. Data for each fund is organized in a tabbed system. You can print any of the fund data and export monthly and historical price data.
Compared to the Principia and Steele Mutual Fund programs, Value Line offers less screening and individual fund data as well as a smaller database of funds and no ETFs. However, downloadable weekly and monthly updates and a reasonable price make this program worthwhile for investors who want more flexible screening criteria than most Internet sites can offer, but do not need hundreds of data fields or an incredibly large database of funds.
Internet-Based Services
The ever-changing Internet means that sites offering mutual fund screening and data are rapidly evolving and growing. All of the sites we discuss here offer some level of free mutual fund screening service and data. However, most sites require that you register in order to use their services. This year we removed five Web sites from the list and added one in order to provide you with the most meaningful on-line services available. BusinessWeek Online was removed because the sites mutual fund data has gradually been declining and the fund screener now only offers a handful of screening criteria. CNN Money, Forbes.com and Kiplinger.com all offered fund screeners with limited criteria and flexibility. Their mutual fund data offerings are similar to what you can get at any comprehensive investment Web site for free. The uniqueness of these four sites comes in the form of on-line articles and archives of their respective financial magazines.
Additionally, the IndexFunds.com site was dropped from the list because they no longer offer a fund screener. Most of the mutual fund screening services mentioned in this comparison will also allow you to search for index funds.
This year we add CNBCs Mutual Fund Screener. Previously, CNBC and Microsoft provided joint content for the MSN Money Web site, but recently parted ways.
Over the years, many Web sites have beefed up their mutual fund offerings and made the screeners more in-depth, but they still dont outrank the available disk-based services in terms of breadth of data and screening flexibility.
CNBC.com-MutualFund Screener
New to the comparison this year is CNBC.com. After CNBC and Microsoft ended their on-line relationship last year, CNBC launched its own financial Web site. In addition to videos from CNBC TV and information about the financial shows broadcast on the network, CNBC offers a useful set of tools for investors.
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With a database of over 17,000 funds and over 100 data points on each fund, the sites offerings rival the content of most comprehensive financial sites. Access to most of the sites data, and all fund data, is free after registration.
Fund data includes annualized returns, including 15- and 20-year returns, and comparisons to categories as well as the S&P 500 index. CNBC.com also offers various risk measures (Sharpe and Treynor ratios, alpha, beta and standard deviation) for the last one, three, five, 10, and 15 years. The site tracks the best and worst one- and three-year returns as well as returns for recent bull and bear periods. Portfolio composition, manager information and a small amount of data on ETFs round out the sites fund data offerings.
The Mutual Fund Screener has over 50 criteria for screening, including risk and return measures as well as portfolio information. You can search for funds using the aforementioned risk measures and time periods, a capability unique to CNBC. The screener shows the passing funds under the list of criteria making adjustments easy and quick. You cannot create custom views, but you can choose from four predefined views. Screens can be saved for later use and results can be exported to an Excel file.
Morningstar.com-Mutual Fund Screener
Morningstar.com offers one of the best mutual fund screeners on the Web and is one of our top picks. The site has a database of over 17,000 funds, provides over 200 data points on each fund and devotes an entire section to ETFsincluding an ETF screener. The ETF screener has eight criteria for screening, including performance and risk measures, and about 200 ETFs in its database.
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Registered members can access a wealth of fund data for free. Performance data is updated on a daily, weekly and monthly basis, while other fund data is updated with month-end data. Information on individual funds provided for free includes: quarterly returns for the last 28 quarters, annual returns for the last eight years, various risk measures, portfolio composition and tax-adjusted returns.
New to the site is Investor Returns, a feature that accounts for periodic investments in a mutual fundfor example, regular contributions to a 401(k) plan. Total return values are calculated as the change in the funds value over a time period, disregarding the fact that investors may buy a few shares at one price, then more shares a month later at a different price. This is a new concept for the site and includes many assumptions, but it can be a way to get a more accurate picture of your actual return.
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The free fund screener has 18 data fields for screening, including annualized return, Morningstar rating, fees, fund manager information and fund category. If a large number of funds passes the screen, only the top 200 results are displayed. Data can be compared to the S&P 500, a category average or a user-defined value. Results are organized in a chart and can be ranked by various criteria. Four predefined views are included, which are not customizable.
You can also add any of the passing funds into a test portfolio for further analysis. Premium members have access to more in-depth portfolio analysis tools.
The Premium fund screener ($15.95 per month) provides over 100 data fields for screening, including numerous performance and risk data points as well as important portfolio information. The screening tool is easy to use. Data fields are organized by category and can be compared to category averages, an index, a specific fund or a user-defined value.
A handy feature of the Premium fund screener is the Data Definition link for every data point. You can read a description of the criterion, examine how the number is calculated and find out why it is important. Also, a Benchmark link provides you with quartile ranges to help you pick a meaningful user-defined value. Screen results are displayed in a table with customizable views and can be saved for later use.
MSN Money-Deluxe Screener
Since the split of Microsoft and CNBC, Microsoft now runs the MSN Money Web site alone, but there are no noticeable changes to the sites fund offerings. Data comes from Morningstar, and the site a has database of over 12,500 funds with over 200 data points on eachincluding performance and risk measures, comparisons with indexes or category, charts, and portfolio information. Most data is updated on a monthly basis, but some performance numbers are updated nightly. MSN Money also has a fairly new section devoted to ETFs.
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The Deluxe Screener is free to use but is an ActiveX program that only runs on Windows-based systems using Internet Explorer or Netscape Web browsers. Those who use the Mozilla FireFox browser are stuck with the Easy Screener, which has only seven criteria for screening. The site offers step-by-step instructions for downloading the ActiveX program.
The Deluxe Screener has over 70 criteria for screening, including various risk and performance measures, Morningstar ratings, portfolio composition, fund holdings, fees and expenses, and fund manager information. The performance criteria, however, only includes year-to-date, three-month total, and one-, three-, five-, and 10-year annualized returns.
You can use multiple data fields for screening, rank the results by any of the criteria and compare criteria to a user-defined value, another fund or any screening criterion. The screener also offers a Field Description area that explains each of the criteria available for screening. Note, however, that the screener only shows the top 200 funds passing the criteria.
Reuters.com-Funds Screener
With over 26,000 funds in its database (including over 450 ETFs), Reuters offers the largest on-line database of funds in this comparison. While the screening tool is one of the simplest, it is free to use, and Reuters data offerings on individual funds are numerous and also free. Mutual fund data is provided by Lipper, giving Reuters.com a unique set of Lipper risk and performance ratings.
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Individual fund data includes annualized performance, portfolio composition information, tax-adjusted returns and more. Some performance data is updated on a daily and weekly basis, but the majority of the data is updated at month-end.
The only glaring data omission is the absence of commonly used risk-related values such as beta and R-squared. However, Lipper does provide a total return versus relative risk graph, which compares the return and standard deviation of a fund with its Lipper classification and asset class over three, five and 10 years. You can also make comparisons to a user-defined fund or index.
The fund screener has only 17 fields for screening, but includes Lipper ratings based on return, tax efficiency and expensecriteria not offered on other sites. You can also use the screener to search for ETFs. The compare-to values are inflexible, offering only ranges to choose frommeaning values cannot be user-defined. In addition, screens cannot be saved or exported.
SmartMoney.com Select-Fund Screener
One of the Webs best fund screeners comes from Smart Money Magazine. Select members ($5.95 per month) can access a highly flexible, in-depth mutual fund screening tool with a database of over 20,000 mutual funds. The site offers over 200 data points on individual funds, including Lipper ratings. Performance data includes annualized returns, calendar-year returns for the last 10 years, category and index comparisons, various risk measures and portfolio composition data.
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The Java-enabled fund screener offers 60 criteria for screening, including a variety of performance and risk measures, Lipper ratings, fees and expenses, portfolio composition and basic mutual fund data. You can compare criteria to user-defined values, another fund or any of the screening criteria. A helpful feature of the screener is a description of each criterion, including comments about the usefulness of each and a list of category averages to help you to pick a meaningful value. Screen results are displayed after each criterion is entered in a table under the criteria list. This allows you to change the criteria easily based on the number of passing funds. Screens can be saved for later use. You can rank the results by any of the criteria used in the screen or by basic fund data, and you can create custom reports.
Additionally, the site offers a Java-based ETF screener (similar to the fund screener) with over 500 ETFs and over 50 screening criteria including performance, risk, valuation and expense data. Criteria can be compared to user-defined values, another fund or any of the screening criteria. And, like the fund screener, definitions and averages for screening criteria are provided. Screens can be saved.
Yahoo! Finance-Fund Screener
Yahoo! Finance offers a good deal of free fund data, some unique to the site. The fund screener is simplistic at best with limited criteria and flexibility, but useful for basic screening. Yahoo! Finance has a database of over 17,000 funds with over 100 data fields on each fund. Data is provided by Morningstar and is updated each month, except for daily price changes.
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Yahoo! Finance offers calendar-year returns for the past 10 years and quarterly returns for the last 40 quarters. Performance is compared to category averages and indexes. As with stocks, each fund also offers a message board and recent new headlines.
Like CNBC, Yahoo! offers a unique set of risk measures. Alpha, beta, R-squared, standard deviation, and Sharpe and Treynor ratios are given for three-, five- and 10-year periods and can be compared to the funds category.
The screener has 17 fields for screening including annualized performance, a few risk measures, some basic fund information and Morningstar ratings. You cannot enter user-defined values or make comparisons to indexes or other funds. The screen results are displayed in a table with one of six predefined views or a view showing the screening criteria. Screens cannot be saved for later use.
Zacks.com-
Custom Fund Screener
Zacks is perhaps best known for offering analyst earnings estimate data to other Web sites, but also offers many resources to individual investors on its own site. The site is mostly free and has data on over 12,000 mutual funds. Over 150 statistics are given for each fund, including various performance and risk measures, index and category comparisons, portfolio composition information and general fund data. Data is updated on a monthly basis. Zacks also offers a small amount of ETF data.
The sites mutual fund screener has 50 criteria for screening but does not offer the ability to rank screen results (passing funds are sorted alphabetically). Screen criteria are divided into categories such as expenses, risk, portfolio composition, performance and shareholder information. You cannot compare criteria with an index or category averages, only user-defined values can be used. Each criterion has a link to a definition explaining what the data point measures.
Zackss screener is good for basic screening, and the site offers enough data on each fund that it is a decent service for initial screening and analysis.
