Charles Rotblut recently spoke at the 2015 AAII Investor Conference. For information on how to subscribe to recordings of the presentations, go to www.aaii.com/conferenceaudio for more details.
Welcome to our 31st annual mutual fund guide. As in past years, this guide gives detailed and useful information about a variety of no-load and low-load funds. It is a guide that I personally refer to throughout the year to find and analyze mutual funds.
This year, we increased the number of funds covered in the printed magazine to more than 730. The formatting is unchanged from last year, making comparisons easy. In addition to five years of return data, you will find important data about portfolio composition, expenses, risk and tax efficiency.
On AAII.com, you’ll find even more information. The online spreadsheet covers more than 1,520 funds (also an increase from last year). The spreadsheet displays 10 years of return data, shows the average valuation of stock holdings and tells you how long the current fund manager has been at the helm. You will also find minimum purchase requirements for both regular and IRA investments.
Whenever possible, we used the same fund categories that we used in our 2011 Guide to Exchange-Traded Funds , which was published in the August 2011 AAII Journal. ETFs have grown into a worthy alternative for investors seeking to mimic the performance of an index (a passive investing strategy).
Before you look at the 2011 performance of your stock-oriented mutual funds in this year’s guide, take a deep breath (and perhaps grab some aspirin). Most stock fund categories were down last year, as were all of the stock indexes listed in Table 1. Many shareholders expressed their frustration by pulling their money. The Investment Company Institute tabulated that domestic equity funds experienced net outflows every week between August 24 and December 28, 2011. In fact, domestic mutual funds did not enjoy net inflows until the week ended January 11, 2012.
One year’s performance should not influence your decision to buy or sell a fund. Look at performance over a period of years and consider how the returns compare to the fund’s category averages. Also, look at the risk index columns to see whether the fund’s strategy includes taking on a level of volatility above or below its category average. Higher relative risk index readings mean the fund is more likely to experience swings in net asset value, both to the upside and to the downside. Also, check how the fund performed during the past bull and bear markets. Combined, this information can help you put last year’s performance into perspective.
Though ETFs have grown rapidly over the past several years, they still pale in comparison to mutual funds in terms of size. For every dollar invested in a mutual fund, just 10 cents is invested in ETFs. Mutual funds are still the primary option for investors seeking low-cost access to actively managed funds.
Next month, the fund landscape could start to change. A new actively managed fund from PIMCO, Total Return ETF PTTDX). For those of you unfamiliar with the Total Return fund, it is one of largest mutual funds in terms of assets under management. Thus, many people throughout the financial services industry will be watching TRXT closely. Success from the new ETF could result in other mutual fund families launching ETF versions of their actively managed mutual funds., will begin to trade. As the name implies, it is an ETF version of PIMCO’s Total Return mutual fund (
In terms of determining whether a mutual fund or an ETF is best for you, we have included an article providing guidance in the online version of this fund guide. The decision starts with determining what your portfolio needs are and then deciding the type of fund that best fulfills your needs. (If you are currently happy with your mutual fund holdings, do not feel like you have to make a change.)
The Guide to the Top Mutual Funds starts here. I hope you find it to be as useful as I do.
Wishing you prosperity,
Charles Rotblut, CFA
Editor, AAII Journal