CNNMoney.com

Companies Economy International Corrections Pre-market Trading After-hours Trading Winners/Losers/Actives Bonds Currencies Commodities World Markets Money Magazine Real Estate Taxes Jobs Ask the Expert Money 101 Autos Mutual Funds The Help Desk Loan Center Best Places to Live Ask the Expert Ultimate Guide to Retirement Retirement Calculators Best Funds Best Places to Retire Fortune Brainstorm Tech Apple 2.0 Blog Big Tech Blog Sectors and Stocks Tech Talk Resource Guide Small Business Makeovers Questions & Answers Small Business Video 100 Best Places to Launch FSB 100 Fortune Small Business Fortune 500 Brainstorm Tech Investing Management C-Suite Rankings Main Create Portfolio Edit Portfolio Create Alerts Edit Alerts
Mutual Funds
    SAVE   |   EMAIL   |   PRINT   |   RSS  
Funds: How much you're really paying
You may be shelling out up to 10 times more than you thought. Plus: 'Real' expenses for the 100 largest funds.
From the November 2005 issue of MONEY Magazine
by Jason Zweig, MONEY Magazine
From MONEY Magazine
Full text of Jason Zweig's feature from the November issue »»

The MONEY 50: MONEY's picks for the best funds in every category »»

TABLE: Stated versus active expense ratios for the 100 largest funds »»
NEW YORK (MONEY magazine) - Whether you're shopping for a car or a mutual fund, the two questions you must answer are "What will it cost me?" and "What's it worth to me?"

You can answer the first by checking a fund's expense ratio, which shows what percentage of your total investment will be eaten up each year in overhead.

Determining what a fund is worth to you is a trickier proposition, one taken on recently by Ross Miller, a risk consultant and former finance professor at Boston University.

Miller kills two birds with one stone: First he confronts the fact that luck looms large in stock picking.

Then he zeroes in on funds that barely bother trying to beat the market. There's not much value in either a lucky or a half-hearted fund.

On average, if eight blindfolded chimpanzees threw darts at the stock pages of the Wall Street Journal for three years, one of them would end up beating the market.

Humans and chimps share roughly 98 percent of the same genes, but that doesn't make it a good idea to give your money to a stock picker who munches on bananas and termites. Our chimp isn't a great investor -- he's just lucky.

Most human stock pickers on a hot streak are just lucky too. You wouldn't want to buy their funds right before their luck runs out.

So Miller adjusts returns for the risk the managers took to earn them.

Meanwhile, many managers are so afraid of lagging the market that they end up copying it, owning similar proportions of the stocks that carry the most weight in the index.

Using some complex math, Miller estimates how much of the fund is imitating the market instead of trying to beat it.

This, he says, "unbundles" your money into a passive portion that might as well be in a cheap index fund and a second (usually much smaller) part with which the manager is more aggressively trying to beat the market.

This makes sense. Why should you have to pay a full management fee on the portion of your money that is not being actively managed?

By Miller's adjusted measure, or the "active expense ratio," Fidelity Magellan's annual costs are not 0.7 percent but 5.87 percent -- and the annual expenses on big U.S. stock funds average around 7%.

(All numbers used here and in the table below are as of Dec. 31, 2004.)

If you buy Miller's argument, many funds cost from five to nearly 10 times more than you thought.

A 3 percent or 4 percent active expense ratio, coupled with solid risk-adjusted returns, is "pretty good," he says.

If you're going to invest outside an index fund, you should look for something the index doesn't offer -- like higher income, lower risk or a shot at outsize returns.

Below are the Miller's active expense ratios for the 100 largest funds ranked by asset size.

Using Miller's score, you're less likely to end up with another sheep-like fund that charges you as if the manager were a lone wolf doing something original.
Size
rank		 Ticker Fund name Stated
expense
ratio		 Active
expense
ratio		 Load 1-yr
return		 3-yr
return		 5-yr
return
13 ABALX American Funds American Balanced A 0.67% 2.72% YES 25.1% -1.2% 2.2%
57 ACEIX Van Kampen Equity and Income A 0.83% 3.32% YES 28.5% -0.9% 3.5%
76 ACGIX Van Kampen Growth and Income A 0.86% 4.09% YES 30.4% -4.0% 2.4%
48 ACRNX Columbia Acorn Z 0.80% 4.21% NO 44.0% -4.0% 3.1%
39 ACSTX Van Kampen Comstock A 0.90% 3.45% YES 34.9% -6.2% -0.1%
8 AEPGX American Funds EuroPacific Gr A 0.87% 3.61% YES 55.5% 0.9% 8.5%
4 AGTHX American Funds Growth Fund of Amer A 0.70% 2.88% YES 38.8% -3.5% 3.0%
1 AIVSX American Funds Invmt Co of Amer A 0.59% 2.81% YES 30.9% -4.1% 1.7%
30 AMCPX American Funds AMCAP A 0.73% 3.03% YES 41.3% -3.2% 1.4%
32 AMRMX American Funds American Mutual A 0.62% 3.01% YES 28.6% -3.1% 2.1%
20 ANCFX American Funds Fundamental Investors A 0.66% 2.67% YES 39.5% -2.9% 4.1%
63 ANEFX American Funds New Economy A 0.89% 3.59% YES 51.7% -2.0% 4.0%
65 ARTIX Artisan International Inv 1.22% 4.61% NO 58.4% -2.2% 6.0%
3 AWSHX American Funds Washington Mutual A 0.64% 3.72% YES 21.9% -5.8% 0.4%
94 BALCX American Funds American Balanced C 1.48% 7.06% NO 24.2% -2.0% 1.4%
93 BJBIX Artio International Equity A 1.31% 4.49% NO 35.5% -5.2% 5.7%
10 CAIBX American Funds Capital Inc Bldr A 0.65% 1.35% YES 27.1% -1.4% 4.3%
73 CSTGX AIM Constellation A 1.29% 5.08% YES 23.5% -8.8% -2.6%
42 CVGRX Calamos Growth A 1.31% 3.74% YES 56.8% -3.4% 0.1%
70 DFSVX DFA US Small Cap Value I 0.56% 2.32% NO 36.7% -10.3% -1.0%
69 DIVBX Morgan Stanley Dividend Growth Secs B 1.28% 6.57% NO 28.7% -7.0% -1.2%
21 DODBX Dodge & Cox Balanced 0.54% 1.52% NO 34.2% -4.7% 1.1%
59 DODIX Dodge & Cox Income 0.45% 1.36% NO 22.2% 6.4% 5.5%
90 FAEGX Fidelity Advisor Equity Growth T 1.32% 6.20% YES 28.3% -6.3% -1.4%
35 FASMX Fidelity Asset Manager 50% 0.73% 2.38% NO 36.1% -0.1% 2.7%
16 FBGRX Fidelity Blue Chip Growth 0.67% 5.35% NO 45.3% -1.3% 1.3%
6 FCNTX Fidelity Contrafund 0.98% 2.70% NO 32.2% -1.6% 4.6%
67 FDCAX Fidelity Capital Appreciation 0.88% 3.07% NO 38.8% -5.8% 0.1%
86 FDETX Fidelity Advisor Capital Development O 0.55% 1.80% YES 32.7% -5.4% -0.3%
22 FDGFX Fidelity Dividend Growth 0.89% 3.70% NO 59.0% -5.1% 0.3%
17 FDIVX Fidelity Diversified International 1.22% 5.19% NO 48.9% -4.5% 4.5%
40 FDVLX Fidelity Value 0.98% 4.16% NO 49.9% -8.5% 0.3%
14 FEQIX Fidelity Equity-Income 0.70% 4.20% NO 34.4% -8.1% -0.4%
29 FEQTX Fidelity Equity-Income II 0.64% 2.89% NO 28.9% -7.8% -1.4%
44 FFFDX Fidelity Freedom 2020 0.75% 4.16% NO 34.1% -1.9% 2.7%
83 FFFEX Fidelity Freedom 2030 0.77% 5.11% NO 36.3% -3.6% 2.1%
36 FFIDX Fidelity 0.59% 3.46% NO 30.1% -4.2% 1.4%
9 FGRIX Fidelity Growth & Income 0.69% 2.91% NO 27.1% -15.8% -7.3%
7 FLPSX Fidelity Low-Priced Stock 0.97% 3.41% NO 49.4% -3.3% 3.2%
2 FMAGX Fidelity Magellan 0.70% 5.87% NO 49.6% -6.2% -0.9%
45 FMCSX Fidelity Mid-Cap Stock 0.65% 2.92% NO 59.2% -5.6% 2.8%
97 FOSFX Fidelity Overseas 1.00% 3.73% NO 41.7% -5.6% 3.7%
15 FPURX Fidelity Puritan 0.64% 2.80% NO 29.9% -1.6% 2.8%
99 FRESX Fidelity Real Estate Investment 0.83% 6.70% NO 55.8% -15.5% -0.8%
58 FRSGX Franklin Small-Mid Cap Growth A 0.98% 5.13% YES 43.6% -4.5% 1.3%
82 GFACX American Funds Growth Fund of Amer C 1.50% 6.84% NO 37.8% -4.3% 2.1%
49 GFAFX American Funds Growth Fund of Amer F-1 0.72% 2.98% NO 38.9% -3.5% 3.0%
100 GTVLX AIM Basic Value A 1.34% 5.50% YES 54.4% -10.0% -2.8%
66 HACAX Harbor Capital Appreciation Instl 0.67% 2.73% NO 44.3% -0.4% 3.0%
41 HADAX Hartford Advisers HLS IA 0.67% 2.81% NO 36.3% -1.7% 2.6%
50 HAINX Harbor International Instl 0.86% 2.86% NO 57.0% 1.0% 9.9%
37 HIACX Hartford Capital Appreciation HLS IA 0.69% 2.41% NO 52.0% -2.8% 4.7%
96 HIADX Hartford Dividend & Growth HLS IA 0.69% 3.09% NO 31.4% -2.5% 3.5%
77 HSTAX Hartford Stock HLS IA 0.49% 2.25% NO 48.3% -5.1% 1.4%
28 JANSX Janus J 0.90% 2.93% NO 46.3% -2.3% 1.8%
87 JIEIX Artio International Equity I 1.02% 3.28% NO 35.9% -5.0% 6.0%
27 LAFFX Lord Abbett Affiliated A 0.84% 4.48% YES 25.3% -7.7% -0.9%
53 LLPFX Longleaf Partners 0.91% 2.11% NO 64.4% -10.3% -1.3%
34 LMVTX Legg Mason Cap Mgmt Value C 1.70% 5.90% NO 49.7% -16.5% -7.7%
80 MIGFX MFS Massachusetts Investors Gr Stk A 0.95% 4.22% YES 43.9% -1.1% 1.8%
64 MSFRX MFS Total Return A 0.89% 3.08% YES 22.9% -1.2% 2.3%
61 MSIQX Morgan Stanley Inst International Eq I 1.00% 3.81% NO 36.6% -2.7% 3.7%
92 NBGEX Neuberger Berman Genesis Tr 1.10% 3.43% NO 27.2% -0.7% 4.7%
55 OAKBX Oakmark Equity & Income I 0.92% 2.63% NO 21.5% 3.8% 6.2%
98 OAKIX Oakmark International I 1.20% 3.73% NO 65.5% -2.1% 6.8%
75 OAKLX Oakmark Select I 1.00% 2.81% NO 64.3% -6.2% 0.0%
62 OAKMX Oakmark I 1.05% 3.75% NO 51.6% -1.9% 1.9%
71 OPTFX Oppenheimer Capital Appreciation A 1.09% 5.70% YES 48.1% -5.1% -0.5%
33 PGRWX Putnam for Growth & Income A 0.90% 5.80% YES 32.5% -9.5% -2.0%
78 PIODX Pioneer A 1.09% 6.26% YES 26.8% -5.2% 1.1%
91 PNOPX Putnam New Opportunities A 1.09% 6.97% YES 36.6% -5.8% 0.2%
25 PRFDX T. Rowe Price Equity Income 0.78% 4.08% NO 28.7% -5.7% 0.9%
54 PRGFX T. Rowe Price Growth Stock 0.76% 5.03% NO 47.0% -3.3% 1.9%
88 PRITX T. Rowe Price International Stock 0.92% 5.33% NO 70.5% -2.3% 5.0%
72 PRNHX T. Rowe Price New Horizons 0.91% 4.14% NO 51.5% -3.7% 1.9%
43 PTLDX PIMCO Low Duration Instl 0.43% 1.22% NO 16.9% 6.2% 4.9%
23 PTRAX PIMCO Total Return Admin 0.68% 3.69% NO 18.5% 8.7% 6.8%
47 PTTAX PIMCO Total Return A 0.90% 4.77% YES 18.3% 8.4% 6.5%
5 PTTRX PIMCO Total Return Instl 0.43% 2.31% NO 18.8% 8.9% 7.0%
51 PVOYX Putnam Voyager A 1.04% 6.92% YES 69.8% 1.5% 3.2%
31 RPMGX T. Rowe Price Mid-Cap Growth 0.87% 3.57% NO 53.1% -0.4% 4.4%
95 RYLPX Royce Low Priced Stock Svc 1.49% 6.19% NO 72.5% -0.7% 5.0%
38 SMCWX American Funds SMALLCAP World A 1.12% 4.87% YES 64.3% -3.3% 5.6%
85 SNIVX Bernstein Tax-Managed Intl 1.24% 4.20% NO 40.9% -9.8% 0.7%
26 TEMFX Templeton Foreign A 1.23% 4.58% YES 65.9% -0.7% 5.2%
74 TFEQX Templeton Instl Foreign Equity Ser Adv 0.83% 3.10% NO 49.3% -1.2% 6.8%
60 TRBCX T. Rowe Price Blue Chip Growth 0.95% 6.55% NO 45.8% -3.0% 1.2%
19 TWCUX American Century Ultra Inv 1.00% 3.88% NO 37.6% -1.8% -1.1%
52 VEXPX Vanguard Explorer 0.72% 5.40% NO 39.8% -6.8% -0.2%
18 VPMCX Vanguard PRIMECAP 0.46% 1.69% NO 38.1% -0.4% 4.2%
68 VQNPX Vanguard Growth & Income 0.42% 3.11% NO 26.5% -7.9% -1.3%
12 VWELX Vanguard Wellington 0.36% 0.94% NO 28.9% 1.3% 5.2%
79 VWENX Vanguard Wellington Adm 0.23% 0.34% NO 29.1% 1.4% 5.3%
56 VWIGX Vanguard International Growth Inv 0.45% 1.36% NO 60.0% -1.9% 6.4%
81 VWNAX Vanguard Windsor II Adm 0.25% 0.47% NO 32.4% -5.7% 1.2%
24 VWNDX Vanguard Windsor 0.39% 1.75% NO 40.9% -8.5% -0.8%
11 VWNFX Vanguard Windsor II 0.36% 1.06% NO 32.2% -5.8% 1.0%
84 VWUSX Vanguard US Growth Inv 0.53% 1.84% NO 36.6% -3.1% 0.7%
89 WOBDX JPMorgan Core Bond Select 0.60% 2.70% NO 12.0% 6.7% 5.6%
Data updated as of: December 3, 2009
Top of page

© 2009 Cable News Network. A Time Warner Company. All Rights Reserved. Terms under which this service is provided to you. Privacy Policy
Live Quotes automatically refresh, but individual equities are delayed 15 minutes for Nasdaq, and 20 minutes for other exchanges. Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET.
* : Time reflects local markets trading time. † - Intraday data delayed 15 minutes for Nasdaq, and 20 minutes for other exchanges. Disclaimer
Copyright © 2009 BigCharts.com Inc. All rights reserved. Please see our Terms of Use.
MarketWatch, the MarketWatch logo, and BigCharts are registered trademarks of MarketWatch, Inc.
Intraday data provided by Interactive Data Real-Time Services and subject to the Terms of Use.
Intraday data is at least 20-minutes delayed. All times are ET.
Historical, current end-of-day data, and splits data provided by Interactive Data Pricing and Reference Data.
Fundamental data provided by Morningstar, Inc..
SEC Filings data provided by Edgar Online Inc..
Earnings data provided by FactSet CallStreet, LLC.