Please help me analyze mutual funds

[FirstTimer90]

I am searching for mutual funds with low fees, I was told to look at Vanguard and Fidelity, are there any other good sites?

Also it is my understanding that finding a fund with a good success rate over 10+ years is a nice place to start (what counts as "good" though....and do you look over 5 year and 10 years or just the 10 year mark?)

I was told I should use morningstar.com (are there any other sites to use?) and find out if the mutual fund has the same manage over the last 10+ years or if there have been many changes.

My first question would be, has this been correct info?
next, does anyone have more to offer and direct me how I can best be educated about selecting mutual funds?
and finally, if you have any specific mutual funds to share with me, please feel free.

thank you in advance all.

[disneysteve]

I agree that Vanguard and Fidelity are good. So is T.Rowe Price.
I agree with looking for a good track record and low expense ratio.
I agree with looking at the tenure of the manager(s) if you are choosing an actively managed fund though I'd also recommend that you focus on index funds where there is no active manager.

As for any more advice, give us more information. What type of account? What are your investment goals? Is this for retirement? What is your time line? What does the rest of your portfolio look like? Do you have your other financial ducks in a row - debt-free, emergency fund in place, etc.?

[FirstTimer90]

I agree with looking at the tenure of the manager(s) if you are choosing an actively managed fund though I'd also recommend that you focus on index funds where there is no active manager.

are there any index funds you can think of that i should take a closer look at? without taking up too much of your time, would you be able to please list a few Pro's and Cons of Index funds Vs. Mutual Funds please?

As for any more advice, give us more information. What type of account? What are your investment goals? Is this for retirement? What is your time line? What does the rest of your portfolio look like? Do you have your other financial ducks in a row - debt-free, emergency fund in place, etc.?

This is for retirement. It is a fund I will use after I max my Roth but still want to put extra money aside for retirement. It will be in the fund roughly 30 years or so. My investment goal is to retire and not work until im 90, hehe. and I am just starting this process so the rest of my portfolio is practically nonexistent, this will serve mostly as my starting block and foundation. yes to the emergency fund, no to being debt free though I am putting away 15% to retire and then using extra to pay down the loan early (nothing with too high of an interest rate, thankfully....no credit card, etc).


thank you for helping.

[disneysteve]

are there any index funds you can think of that i should take a closer look at? without taking up too much of your time, would you be able to please list a few Pro's and Cons of Index funds Vs. Mutual Funds please?

You can build a very adequate portfolio with 3 funds: Total Stock Market, Total International Market, Total Bond Market. But it also depends on how your Roth is invested. You want to have an overall asset allocation plan and stick to it.

What's the difference between an index fund and an actively managed fund? An active fund has a human manager individually picking the stocks to buy and sell. An index fund simply mirrors an index like the S&P 500 or the Russell 2000 or some other index. Statistically, index funds outperform active funds because no individual can consistently time the market and buy and sell at just the right time. Lots of people think they can beat the market but they are virtually always proven wrong.

This is for retirement. It is a fund I will use after I max my Roth

What funds do you hold in your Roth?

[QuarterMillionMan]

Very informational thread for me as well. I've done most of my investing in individual stocks and just now getting my feet wet with mutual/index funds. An index fund that I'm currently looking at is SWPPX, Schwab S & P 500 index fund. It is currently trading at $28.36 and has a yield of 1.36%. The funds' summary from Yahoo finance is as follows. The investment seeks track the total return of the S&P 500® Index. The fund generally invests at least 80% of its net assets in stocks that are included in the S&P 500® Index. It generally gives the same weight to a given stock as the index does. The fund may invest in derivatives, principally futures contracts, and lend its securities to minimize the gap in performance that naturally exists between any index fund and its corresponding index.


On a related note, my dad (78 yrs old) recently invested in the Franklin Income fund (FKINX). According to Yahoo Finance the fund summary is listed as follows. The investment seeks to maximize income while maintaining prospects for capital appreciation. The fund invests in a diversified portfolio of debt and equity securities. The equity securities in which the fund invests consist primarily of common stocks. Debt securities include all varieties of fixed, floating and variable rate instruments, including secured and unsecured bonds, bonds convertible into common stock, senior floating rate and term loans, mortgage-backed securities and other asset-backed securities, debentures, and shorter term instruments. It may invest up to 100% of its total assets in debt securities that are rated below investment grade.


I have no other knowledge on these funds other than what I've illustrated above. Any other insights about these funds that others might have would be greatly appreciated by me.

[QuarterMillionMan]

Very informational thread for me as well. I've done most of my investing in individual stocks and just now getting my feet wet with mutual/index funds. An index fund that I'm currently looking at is SWPPX, Schwab S & P 500 index fund. It is currently trading at $28.36 and has a yield of 1.36%. The funds' summary from Yahoo finance is as follows. The investment seeks track the total return of the S&P 500® Index. The fund generally invests at least 80% of its net assets in stocks that are included in the S&P 500® Index. It generally gives the same weight to a given stock as the index does. The fund may invest in derivatives, principally futures contracts, and lend its securities to minimize the gap in performance that naturally exists between any index fund and its corresponding index.


On a related note, my dad (78 yrs old) recently invested in the Franklin Income fund (FKINX). According to Yahoo Finance the fund summary is listed as follows. The investment seeks to maximize income while maintaining prospects for capital appreciation. The fund invests in a diversified portfolio of debt and equity securities. The equity securities in which the fund invests consist primarily of common stocks. Debt securities include all varieties of fixed, floating and variable rate instruments, including secured and unsecured bonds, bonds convertible into common stock, senior floating rate and term loans, mortgage-backed securities and other asset-backed securities, debentures, and shorter term instruments. It may invest up to 100% of its total assets in debt securities that are rated below investment grade.


I have no other knowledge on these funds other than what I've illustrated above. Any other insights about these funds that others might have would be greatly appreciated by me.

[jIM_Ohio]

Low fees are relative, because anything under 1% is "low"
anything under .5% is really low

and I would not make choices based on the cheapest bidder

I would decide on an allocation, like 80-20 or 50-50
I would then decide on a breakdown- % large cap, % mid cap, % small cap and % foreign
then I would pick the funds in those asset classes

I would not choose based on which funds are cheapest, then use that as allocation,

In addition, you need to do more homework...
the market is 75% S&P 500 and 25% mid/small cap, so to truly have the "market", the large cap needs to be a 3:1 ratio to small cap (like 45% large cap, 15% extended market). If you want to beat the market, make them equal, this will overweight small cap by a 2X factor. Granted this would historically give you an extra % of return, is it worth the risk?

In the best of times I would have 25% foreign- that would be foreign stocks and bonds combined.

[disneysteve]

I would not choose based on which funds are cheapest, then use that as allocation,

Agreed. Make the allocation first and then select the funds to meet that allocation.

[jIM_Ohio]

I am searching for mutual funds with low fees, I was told to look at Vanguard and Fidelity, are there any other good sites?

Also it is my understanding that finding a fund with a good success rate over 10+ years is a nice place to start (what counts as "good" though....and do you look over 5 year and 10 years or just the 10 year mark?)

I was told I should use morningstar.com (are there any other sites to use?) and find out if the mutual fund has the same manage over the last 10+ years or if there have been many changes.

My first question would be, has this been correct info?
next, does anyone have more to offer and direct me how I can best be educated about selecting mutual funds?
and finally, if you have any specific mutual funds to share with me, please feel free.

thank you in advance all.

One other point, morningstar created a brand, but I would not trust the brand blindly...
google finance, yahoo finance and each mutual fund website will give information. Most of them will even present the "morningstar rating", the thing with the rating is it biases ratings to recent performance, not long term performance. By law the information presented is controlled (performance charts are standardized, top 10 holdings etc...), so the best thing you can do is educate yourself what information is important, where you get the information is less relevant.

and it rates absolute performance, not standardized or risk adjusted performance (for the most part). Do your homework- if you don't know how morningstar rates funds, using it as a resource is very very misleading.

Morningstar does have great tracking tools for portfolios (best I have seen, by far) and also provides professional advisors some tools which are tough to find elsewhere. I do not think the morningstar brand is truly understood by most of the people which use it.

[feh]

are there any index funds you can think of that i should take a closer look at? without taking up too much of your time, would you be able to please list a few Pro's and Cons of Index funds Vs. Mutual Funds please?





This is for retirement. It is a fund I will use after I max my Roth but still want to put extra money aside for retirement. It will be in the fund roughly 30 years or so. My investment goal is to retire and not work until im 90, hehe. and I am just starting this process so the rest of my portfolio is practically nonexistent, this will serve mostly as my starting block and foundation. yes to the emergency fund, no to being debt free though I am putting away 15% to retire and then using extra to pay down the loan early (nothing with too high of an interest rate, thankfully....no credit card, etc).


thank you for helping.

There are folks here that will give you good advice, but I highly recommend that you educate yourself and then make your own decisions. It only takes a few hours (or less) to learn the basics of investing.

I always suggest people start here:

http://www.bogleheads.org/wiki/Bogleheads%C2%AE_investing_start-up_kit