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Computerized Investing > Third Quarter 2011

The Top Mutual Fund Screening Services

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by Joe Lan, CFA

Individual investors have numerous options when making investment choices. Choosing an appropriate asset allocation, and the holdings to maintain it, can be challenging, especially with the broad range of investment options open to individual investors. Luckily, there is an abundance of high-quality mutual funds that can keep investors who are managing a personal portfolio on track.

Mutual funds, as well as exchange-traded funds (ETFs), are popular due to several advantages they hold over buying and managing an individual stock portfolio. As we all know, diversification is key to lowering your risk while maintaining an expected level of return. Although most investors would not hold just a single fund, it is actually possible to diversify your portfolio with a single broad-based mutual fund. In addition, many mutual funds are actively managed, meaning that most of the hard work will be done for you. Investors still need to keep an eye on their asset allocation, especially if they are employing mutual funds for specific sectors or asset classes, but they will not need to spend time picking individual stocks.

With the wealth of mutual funds available, tools to help investors select between the funds are crucial. In our last Mutual Fund Screening Services article (Third Quarter 2009), we focused on the top disk-based and online software, providing a comprehensive review of a select few. This article stays with this strategy and reviews the top disk-based fund screener and the top two online fund screeners. Note that the MSN Money Deluxe Screener, which was reviewed in our previous article, is no longer offered.

An Overview of Screening

Mutual fund screening, like stock screening, offers a way to winnow a universe of mutual funds down to a more manageable number. The screens are based on criteria that investors find important, such as performance, expenses and risk level. The ability to find a manageable number of mutual funds that meet your criteria is invaluable, especially because the universe of mutual funds exceeds 22,000 in each of our featured screeners.

The screening process can also help investors round out their portfolios. An investor who lacks holdings in a certain asset class, sector, or even style is able to quickly find all mutual funds within the desired area, rendering the decision-making process much easier.

In the past, software-based mutual fund screeners dominated, mostly because of the immaturity of online screeners. The software programs are highly flexible and provide a wide range of statistics. The screening capabilities are usually more comprehensive than those offered by online screeners. The data provided by software-based mutual fund screeners is usually updated monthly or quarterly. The disadvantage, however, is that software-based screeners are more expensive than their online counterparts. The software fees can add up.

The rise of online mutual fund screeners has been significant in recent years. Their lower cost, along with the added flexibility and capabilities of online screeners, have made them a popular choice among individual investors. Since these screeners are Web-based, there is no need to download updates. The data provided is generally updated daily for dynamic figures, such as net asset value, and monthly for reported figures such as portfolio composition. Since online screening services are constantly improving their offerings, it is very likely that these screeners will eventually replace software-based mutual fund screening services altogether.

Characteristics of the Top Screeners

When selecting a screener, there are several important factors to consider. Of course, the price to use the screener will always be a central consideration, but equally essential is the flexibility and offerings that the screener provides. Investors should weigh the universe of funds, the data points available for screening, ease of use, the depth of fundamental data, and the frequency of updates provided by the program.

The mutual fund universe is significant. The ability to quickly display all funds in a certain sector with high long-term performance at a certain expense ratio is quite helpful.

It is important to select a screener that provides a wide variety of data points and a robust universe. The flexibility of the screener is equally vital in preparing a good screen.

Fund Universe and Screening Criteria

One of the most important characteristics of a top mutual fund screener is the fund universe. The number of funds in the database should be exhaustive. Each of the screeners that is reviewed in our article offers at least 22,000 funds.

The criteria available for screening should also be comprehensive. More importantly, criteria that you frequently use, and consider important, should be available. We take both of these factors into careful consideration when deciding on our top screeners.

Frequency of Updates

Disk-based screeners typically update on a monthly basis, and they are usually available for download online. Needless to say, the software-based programs are not updated unless a new download is provided and installed.

Most of the data in online programs are also updated monthly. Items such as price, price charts and net asset values may be updated more frequently. But for the most part, data elements are tied to a monthly marking-to-the-market that is performed by the mutual funds.

Depth of Fundamental Data

Another important feature is the amount of data the service provides on each fund. Disk-based programs are usually more expensive, but typically provide a wealth of data, including graphs and sector information.

Online programs have become increasingly expansive and offer most of the data the typical individual investor needs. For the most part, high-level online mutual fund screeners are housed within comprehensive all-in-one investing websites, so you will have quick access to the mutual fund data provided by the site itself. However, the top disk-based service still holds an edge in terms of the amount of mutual fund data presented.

The comparison grids on pages 24 and 25 display a side-by-side comparison of the top mutual fund screeners reviewed in this article.

Mutual Fund Screening Software Mutual Fund Expert Personal Mutual Fund Expert Professional Mutual Fund Expert Pro-Plus
Company
Steele Systems Inc. Steele Systems Inc. Steele Systems Inc.
Telephone
800/315-9002 800/315-9002 800/315-9002
Web Address
www.mutualfundexpert.com www.mutualfundexpert.com www.mutualfundexpert.com
Delivery Medium
CD-ROM/Internet CD-ROM/Internet CD-ROM/Internet
Update Schedule
monthly/quarterly monthly/quarterly monthly/quarterly
Price
 $22/month; $32/quarter $52/month; $92/quarter $62/month; $122/quarter
Platform
Windows (Vista & 7 compatible) Windows (Vista & 7 compatible) Windows (Vista & 7 compatible)
Data Source
Morningstar Morningstar Morningstar
Database 
Content
Total Number of Funds
25,067 25,067 25,067
Number of Data Fields
90+ 225+ 700+
Performance
Monthly Total Returns last 12 months last 120 months 1962 to present
Quarterly Total Returns latest quarter latest quarter latest quarter
Annualized Returns 1/3/5/10 years 1/3/5/10 years 1/3/5/10/15/20 years
Return for Individual Yrs last 10 years last 10 years 1962 to present
Year-to-Date Return Y Y Y
Comparison % rank, +/- category % rank, +/- category, +/- index % rank, +/- category, +/- index
Tax-Adjusted Returns N N N
Risk-Related Data (see key)
a, B, R-sq, st dev, avg mat a, B, R-sq, st dev, avg mat, S, T a, B, R-sq, st dev, avg mat, S, T
Portfolio Information (see key)
mgr, comp, foreign mgr, comp, lg hold, foreign mgr, comp, lg hold, foreign
Screening
Number of Data Fields for Screening 95 240 714
Number of Data Fields for Ranking 95 240 714
Category
Y Y Y
Monthly Returns
Y (latest month) Y Y
Quarterly Returns
Y (latest quarter) Y (latest quarter) Y (latest quarter)
Annualized Returns
Y Y Y
Calendar-Year Returns
Y Y Y
Year-to-Date Return
Y Y Y
Relative Performance
Y Y Y
Risk
Y Y Y
Portfolio Composition Information Y Y Y
Screen for ETFs
Y Y Y
Fees/Expenses/Loads
Y Y Y
Manager Tenure
Y Y Y
Purchase Amounts
Y Y Y
Save Screen Criteria
Y Y Y
Reporting
Charts
Y Y Y
Customizable Formats
Y Y Y
Export to a File
Y Y Y
Mutual Fund Screening Service
Morningstar.com Premium  SmartMoney.com Select 
Fund Screener Fund Screener
Company
Morningstar, Inc. Smart Money Magazine
Telephone
866/486-9750 NA
Web Address
www.morningstar.com www.smartmoney.com
Delivery Medium (Software/Internet/On-Line) Internet Internet
Update Schedule
daily/weekly/monthly daily/weekly/monthly
Price
$20.95/month or $185/year $5.95/month; $58/year
Platform
any PC with Internet any PC with Internet
Data Source
Morningstar Lipper
Database 
Content
Total Number of Funds
24,500+ 22,000+
Number of Data Fields
300+ 200+
Performance
Monthly Total Returns latest month latest month
Quarterly Total Returns last 28 quarters  
Annualized Returns 1/3/5/10/15/20 years 1/3/5/10 years
Return for Individual Yrs last 7 years last 10 years
Year-to-Date Return Y Y
Comparison % rank, +/-category, +/- index % rank, +/- category, +/- index
Tax-Adjusted Returns Y Y
Risk-Related Data (see key) a, B, R-sq, st dev, avg mat, S a, B, R-sq, st dev, avg mat
Portfolio Information (see key) mgr, comp, lg hold, foreign mgr, comp, lg hold, cap gain
Screening
Number of Data Fields for Screening
300+ 50+
Number of Data Fields for Ranking 300+ 50+
Category
Y Y
Monthly Returns
Y (latest month) N
Quarterly Returns
Y (latest quarter) Y (latest quarter)
Annualized Returns
Y Y
Calendar-Year Returns
last 7 years N
Year-to-Date Return
Y Y
Relative Performance
Y Y
Ratings
Y (Morningstar Ratings) Y (Lipper Leader ratings)
Risk
Y Y
Portfolio Composition Information Y Y
Screen for ETFs
Y (separate ETF screener) Y (separate free ETF screener)
Fees/Expenses/Loads
Y Y
Manager Tenure
Y Y
Purchase Amounts
Y Y
Save Screen Criteria
Y Y
Reporting
Charts
Y Y
Customizable Formats
N Y
Export to a File
N Y

Key to Risk and Portfolio Abbreviations

Risk-Related Features Data

a: alpha, market risk-adjusted performance figure

avg mat: average maturity (for bond funds)

B: beta, a measure of market risk

R-sq: R-squared, proportion of beta related to market

st dev: standard deviation, volatility of fund’s return

S: Sharpe ratio, standard deviation-adjusted measure of performance

T: Treynor ratio, beta-adjusted measure of performance

Portfolio Information

cap gain: unrealized capital gains

comp: portfolio asset composition

foreign: percentage of fund in foreign securities

lg hold: largest holding of fund

mgr: portfolio manager and tenure

Top Screening Software

Disk-based fund screeners are usually more expensive than online screeners, but they offer a robust depth of information and flexibility that cannot be found in online screeners. Their capabilities can outweigh the costs for sophisticated investors, and most software programs come with extensive fundamental data on each mutual fund, which can save investors time and energy.

Mutual Fund Expert

Mutual Fund Expert, by Steele Systems Inc., offers three levels of mutual fund screening service: Personal, Professional and Pro-Plus. Since our last comparison, Mutual Fund Expert has increased the number of mutual funds covered in its program by over 1,000 funds, and the program now holds over 25,000 funds in its database at each service level.

All the data provided by Mutual Fund Expert comes from Morningstar and is updated monthly. The database is uploaded online on the fourth or fifth business day of each month. Passwords that unlock the database are emailed to you. You may also opt to receive a backup data update CD, which is shipped around the middle of each month.

The Personal version offers 95 data fields for screening, while the Professional version provides 240 and Pro-Plus has 714. The fund information and fund characteristics provided are similar for all three levels: Each offers name, share class, asset category, geographical area, years since inception, and Web address. The program separates funds into true no-load funds, funds with systematic withdrawal plans, fund of funds, index funds, enhanced index funds, socially responsible funds, life cycle funds, hedge funds and institutional-only funds. In addition, the Professional and Pro-Plus service levels distinguish between master-feeder (hedge) and HOLDR funds.

Performance figures and risk statistics vary greatly between the three levels of service. The Personal version provides common performance numbers such as monthly returns and graphs for the last 12 months, risk-adjusted ratings for one- and three-year periods, and rankings within style sectors. Also, 1-, 3-, 5- and 10-year annualized returns are displayed. The Professional version includes the data provided in the Personal version and also presents calendar and monthly returns for the past 10 years. Furthermore, Professional includes one-, three-, five-, and 10-year SEC load-adjusted total and average returns, along with other SEC figures. The Pro-Plus version provides all figures available in the Professional version and reports calendar and monthly returns since 1962, 15- and 20-year total and annualized returns, and since-inception average and total returns. Pro-Plus also presents up-market, down-market and full cycle returns since 1956.

Risk statistics provided in the Personal version include three-year beta, monthly standard deviation, alpha, R-squared, monthly mean and volatility. The Professional version additionally provides annualized standard deviation, Sharpe ratio and Treynor ratio. The Pro-Plus version presents one-year, five-year and 10-year figures for all the risk statistics included in the Professional version.

Creating a screen is a very simple process, and the program does a great job of walking you through it. There is an entire section in the help menu on running screens, or “filtering the database,” as it is called by the program. Each criterion can be compared to a custom value, the value for another fund or an index value. However, you cannot see the number of funds that pass each individual criterion.

A useful feature of Mutual Fund Expert is the ability to filter using “nested conditions.” Nested conditions offer greater flexibility by essentially allowing users to “layer” screening criteria. In most mutual fund screeners, a fund can only pass a screen if it meets all the criteria entered. In contrast, Mutual Fund Expert can filter for funds that meet a portion of several conditions. For instance, the program can screen for funds that meet condition one and either condition two or condition three. Likewise, it can filter for funds that meet both condition one and condition two or only condition three. As you can see, this added screening “layer” offers an assortment of new possibilities. Each screen can also be saved for later use.

Overall, Mutual Fund Expert provides a large database of mutual funds (and exchange-traded funds). A robust mutual fund screening service is only one part of the program and, needless to say, purchasing the program will give you access to its other features, such as portfolio analysis and tracking. The downloads are timely and the installation process is quick and painless.

Top Online Services

It should come as no surprise that online mutual fund screening services are gaining on their software-based counterparts. The two online mutual fund screening services detailed here are each part of larger financial websites. They have grown considerably since our last comparison, and one would hope that they continue to do so.

Our comparison provides a comprehensive overview of the two mutual fund screening services we regard as the best: Morningstar.com Premium Fund Screener and SmartMoney.com Select Fund Screener. MSN Money’s Deluxe Screener, which we also reviewed in 2009, is no longer being offered.

The screening capabilities offered at these sites continue to be outstanding, and they should be the first place you turn for online mutual fund screening.

Morningstar.com Premium Fund Screener

Morningstar was originally known for its thorough data on mutual funds, and they have since expanded their offerings to become a top comprehensive website for investment research. Morningstar.com’s Premium Fund Screener is only available to premium subscribers for $20.95 a month or $185 a year; however, it is one of the best on the Web.

The Premium Fund Screener has a database of just over 24,500 funds. The data points are broken down into five broad categories: general, ratings, performance, portfolio, and management and purchase data.

In addition to the generic fund data found in the general category, the Morningstar.com Premium Fund Screener also makes a distinction for special fund types, including index funds, enhanced index funds, socially conscious funds, life cycle funds, and funds of funds. Furthermore, the screener allows users to screen for funds that are Morningstar analysts’ favorite and least favorite picks.

Morningstar.com’s Premium Fund Screener incorporates its proprietary ratings system into the available data points. Morningstar performance and risk ratings are available for screening, as well as the average moat, which is a competitive advantage rating created by Morningstar. In addition, three-, five- and 10-year Morningstar ratings are offered as data points.

The performance section is the most expansive area of the fund screener. Most of the data points are fairly common, including year-to-date through 15-year return figures, yield, and yearly annual returns going back to 2001. The screener also offers the ability to screen on yearly annual returns by percent rank going back to 2001, and annual outperformance or underperformance of the fund relative to its category. Users can screen using bear-market percent rank, and Sharpe ratio and standard deviation are available.

Specific portfolio characteristic data points are found in the portfolio section. Funds can be screened based on their composition of cash, U.S. stocks, non-U.S. stocks, and bonds, as well as their sector weightings and stock types. There are 11 sector classifications, which are the same 11 defined by Standard & Poor’s. Fixed-income characteristics such as average maturity, duration, credit quality, coupon and price are available as data points as well.

Management and purchase data, the final section, lets users specify fund family and manager name and tenure, as well as characteristics such as minimum purchase, fees and expenses, and fund size.

Creating a custom screen is very intuitive. The dropdown box provides the entire list of data points sorted by category. After selecting the appropriate data point, a pop-up box will appear with the data point, prompting you to fill in the comparison and value fields. If you are entering a specific value for comparison, a separate pop-up window will appear giving the quartile ranges for your data point. This feature is particularly useful in ascertaining how tight or loose your screen is for the particular data point.

After entering a criterion, the screener will show you how many funds pass, enabling you to quickly tighten or loosen a field if needed.

Morningstar.com lists all the passing funds at the bottom of the screen, in alphabetical order. You can sort this list by any column. Morningstar.com’s fund page and analyst report (premium only) are linked here. You are able to quickly add any of the funds from the list to your portfolio tracker by clicking on Add to Portfolio. In addition, an interesting feature is “Score on Preferences,” which ranks the funds you select according to how important you feel each criterion is on a scale of one to ten. For instance, if you screen funds based on year-to-date returns and fees, but believe fees are far more important than returns, you can set fees at a nine or 10 preference score and set returns at a four or five preference score. The Premium Fund Screener will weigh the importance of each criterion based on your scores and show you the updated results accordingly. This can help you decide between several funds that pass your screen.

A free mutual fund screener is also provided that includes 18 data points for screening. The data points are set, so there are limited customization capabilities. Furthermore, the screens cannot be saved.

SmartMoney.com Select Fund Screener

SmartMoney.com offers a very capable mutual fund screener on their website. As with Morningstar.com’s Premium Fund Screener, a paid membership of $5.95 a month or $59 a year is needed to access SmartMoney.com’s Select Fund Screener.

The mutual fund database in the screener consists of over 22,000 funds, an increase of about 1,000 funds since the last time this service was covered in the Third Quarter 2009 issue.

SmartMoney.com’s Select Fund Screener categorizes data points into eight sections: profile, performance, risk, ratings, portfolio, expenses, management and purchase information.

The profile section includes fund type and classification as well as total net assets. The performance section allows you to sort performances from the previous three-month period through 10-year annualized performance, as well as percentage rank for each return. Risk figures include beta, alpha and standard deviation, as well as the best three-month return and worst three-month return. The worst three-month return provides you with an expectation of the maximum you might lose over a three-month period, a useful piece of information.

The Select Fund Screener also allows you to sort using ratings provided by Lipper. Portfolio characteristics such as average price-earnings ratio, average price-to-book ratio, yield, and percentage of holdings in each sector and asset class are also offered as data points. Fees, management, and minimum investment requirement data are also available for screening.

Entering the criteria you are interested in is fairly simple. There are three cell spaces provided, and the variables, grouped by category, are selected in the first cell. Conditions are set in the second cell, and the value that the variable is compared to is selected in the third cell.

The Select Fund Screener includes several features unique to SmartMoney.com. Each data point provided includes averages and a description on the right-hand side of the page. A table, a histogram and thumbnails are provided at the bottom for each criterion as well. These features ensure that you fully understand each criterion you enter and that you are able to input meaningful values. You can see the distribution for all available mutual funds for each criterion selected.

Unfortunately, the number of companies passing each individual criterion is not provided. This makes tightening and loosening a criterion more time-consuming. Passing funds are displayed in a non-customizable table at the bottom of the screen. The results, however, can be ranked according to each column.

After creating each screen, you can export the data by selecting the Make Report icon. The screen can also be printed and saved for later use. Also, the service offers nine preloaded screens to help you get started.

Fund information is linked by the fund ticker symbol in the first column of the table. The data is provided by Lipper. The summary page provides common fund data as well as the Lipper rating, a mutual fund rating score created by Lipper that rates mutual funds on a scale of one through five according to total return, consistent return, preservation, tax efficiency and expense.

SmartMoney.com also provides one of the most comprehensive ETF screeners online. The database currently lists 1,240 exchange-traded funds and boasts over 50 data points for screening.

  Performance Documentation Ease
of Use
Software/
Access Cost
Pros  
Flexibility of 
Criteria
Data
Provided
 
Cons
Disk-Based Software
Mutual Fund Expert Personal
www.mutualfundexpert.com
5 3 5 5 $22/mo.;
$32/qtr.
+Timely download of data updates –Limited data points 
–No tax-adjusted returns
–Cannot see how many funds 
  pass individual criteria
Mutual Fund Expert Professional
www.mutualfundexpert.com
5 4 5 5 $54/mo.;
$92/qtr.
+120 mos. of returns –No tax-adjusted returns
+Timely download of data updates –Cannot see how many funds 
  pass individual criteria
Mutual Fund Expert Pro-Plus
www.mutualfundexpert.com
5 5 5 5 $62/mo.;
$122/qtr.
+Most screen criteria
   & fields of top services
–No tax-adjusted returns
–Cannot see how many funds 
+Monthly returns back to 1962   pass individual criteria
 
+Timely download of data updates  
 
Online Services
Morningstar.com Premium
Fund Screener
www.morningstar.com
4 4 5 5 $20.95/mo.;
$185/yr.
+User-defined values for screen criteria –Screen results appear on different
  page than criteria
+Definitions of screening criteria –Pop-up boxes in screener 
  get cumbersome
+Large number of screening criteria  
 
SmartMoney.com Select Fund Screener
www.smartmoney.com
4 4 5 5 $5.95/mo.;
$59/yr.
+User-defined values for screen criteria –Limited monthly and quarterly
  return data
+Avgs for meaningful user-defined compare –Cannot see how many
  funds pass individual criteria
+Definitions of screening criteria  
 

Conclusion

Although mutual funds come with an associated management fee, they can provide added diversification benefits for investors. Theoretically, a single total market mutual fund can provide adequate diversification for your portfolio.

If you are an investor who likes to choose your own stocks for the possibility of providing active returns to your portfolio, chances are you have to stick to smaller-cap stocks that are not covered by many analysts. Using mutual funds for certain market capitalizations, such as large-caps, while choosing your own stocks for the smaller-cap segment is a great way to diversify and lower your risk while attempting to generate above-market returns. Mutual fund screeners are especially helpful to individual investors who want to screen a universe of mutual funds in order to find the appropriate ones for them.

Software-based mutual fund screeners are still more powerful, but online screeners are constantly improving and are offered at a cheaper price. Choosing the correct fund screener depends on your individual circumstances. For most individual investors, an online service is the most cost-effective option. Investors who are interested in more advanced screening should opt for a software program.


Discussion

Marla from NC posted over 3 years ago:

I used to absolutely rely on the screener that came with the MSN Deluxe Toolbox, until they retired it. It had all the features I wanted and it was free. Can you do another article that compares free mutual fund screeners?


Richard from CA posted over 2 years ago:

I subscribed to Steele Person Mutual Fund
Expert for several years but decided it was not cost effective. Although a very good service, as an individual investor, I buy mutual funds only a few times a year, besides following my holdings. Paying a couple hundred dollars for this convenience is too costly, especially when I can get, with a little effort, all the information I need from free sites.


William from TX posted over 2 years ago:

I have subscribed to Steele's Mutual Fund Expert Pro + edition for years. It is extremely useful as it shows not only fund, ETF & index data but objective & category data for comparison. Easy to use. M* data. All performance, ratios and risk performance at a click. Not for trading, but great for analysis & research. Only negative feature - often being ask for info by fellw investors.


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