Mutual Funds - General Discussion
- litab16
- litab16
- Thruhiker
- JenL_3
- DennisL
- litab16
- JenL_3
- litab16
- DennisL
- litab16
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» litab16 - Schwab Select Share
Those select share rates are only available on fund levels of $50,000 or more. Here's the direct quote from Schwab:"Select Shares
"We've significantly reduced operating expense ratios (OERs) and created a new class of index fund shares – Select Shares – to give you a more cost-effective way to invest. With a minimum initial investment of $50,000 in Select Shares, you can enjoy these new low OERs, guaranteed through at least February 29, 2000. All else being equal, lower expenses can mean higher potential returns because more of your money is working for you."
-- posted by litab16
» litab16 - Fee Comparison - Schwab & Vanguard Index
Just to keep the record straight here are the fee comparisons (these are the non-select rates for Schwab). I'm sorry, I erred the Schwab S&P is under .5% because there is no redemption fee, which is common on their other funds:
Schwab S&P 500 - .35%
Schwab 1000 Index - .46% plus .5% redemption fee
Schwab Small Cap Index - .49% plus .5% redemption fee
Vanguard 500 Index - .18%
Vanguard Growth Index - .22%
Vanguard Small Cap Index - .24%
-- posted by litab16
» Thruhiker - Lita
In the interest of accuracy and full disclosure:The Schwab redemption fee only applies to shares held 6 months or less.
You didn't mention the 0.25% "transaction fee" that Vanguard charges on some of their Index funds. Yeah, its paid to the fund (not Vanguard) but it tends to overstate the funds returns.
Schwab will "stray" from the index to avoid passing along capital gains distributions.
Again, no argument that Vanguard is a cheaper fund to own, but the difference is not as great as your post suggests.
-- posted by Thruhiker
» JenL_3 - Socially Responsible Investing
This article on Socially Responsible Investing, SRI, is from RagingBull.com:The article compares the performance of some "Socially Responsible" mutual funds with the S&P500.
Personally I don't like the term "Socially Responsible Investing", because that would imply that the alternative is "Socially Irresponsible Investing".
I wouldn't knowingly purchase stock in a company that produces a product that I find morally deplorable, namely tobacco, but I don't go so far as to seek out mutual funds that exclude tobacco stocks.
So is that being hypocritical?....I don't know.
Does anyone in the group invest in SRI mutual funds? If so which ones, and why?.....Jen
-- posted by JenL_3
» DennisL - SRI
Jen, I agree with you that it is not hypocritical to not seek out funds that exclude, for example, tobacco stocks. If one did, one would not be able to invest in any of the prevalent index funds such as the total stock market or S&P 500.BB has addressed this subject many times on Moneytalk, as regular listeners know. We know, of course, that he has no problem owning the total stock market index, even though it includes a stock like Phillip Morris.
Nobody holds a gun to my head and orders me to smoke cigarettes or drink booze. Each individual makes choices about what to put into his or her body, so I'm not sure that I would even call a company like Phillip Morris socially irresponsible. I do think BB goes a little too far on that score, but I understand his take on it because a family member of his died from the results of smoking.
-- posted by DennisL
» JenL_3 - Enhanced Index Funds
Lita - Thanks for the Latimes.com link. Here's another article I found there about enhanced index funds:Indexers do the Active Twist to Beat Market
These enhanced index funds use a variety of strategies to try to beat the index 500:
Perhaps the most interesting approach is one whereby fund managers hope to beat the S&P 500 by investing in bonds.
They frequently start by purchasing futures contracts on the S&P 500. The values of these contracts rise and fall in nearly perfect lock-step with the index, yet a futures position can control a large index position for very little cash down, along with a financing charge. That frees up most of a fund's assets to be invested in something else--usually bonds.
If the managers can buy bonds whose yields more than offset the fund's various expenses--including that futures financing charge--then shareholders will beat the S&P 500.
But the article concludes with:
Given the greater complexities, tax drawbacks and higher expenses of enhanced funds--to say nothing of the lack of downside protection--you may conclude that a straight index portfolio makes more sense.
"With these enhancements, we try to outperform the market, but there are no guarantees," Vanguard's Sauter said. "The odds are about 3-to-1 against us."
....Jen
-- posted by JenL_3
» litab16 - Good Article, Jen
Another interesting quote from the article is the lack of success managed mutual funds have had beating the market. Given that index funds have lower costs, most mutual fund investors would have been better off using S&P index funds during this bull market:"And in mutual funds, a portfolio manager who consistently beats the market by 1 percentage point a year is a legend. It's no easy feat matching the market, let alone beating it. Only 31 stock-oriented funds have topped the performance of the Standard & Poor's 500 index over the past decade and a half, according to fund tracker Lipper Inc. of New York. Just 17 beat the index by at least 1 percentage point annually over the 15-year span ending March 31. That's 17 out of 414 stock funds that have been around at least 15 years, not counting dozens of poor performers that were merged into other funds or liquidated over the years. To be fair, the S&P 500 has outperformed other indexes in this period, and active managers had a better record before the 1990s bull market."
-- posted by litab16
» DennisL - Michael Lipper Interview
Click here to read an interview with Michael Lipper by CBS MarketWatch. Lipper discusses the decrease in mutual fund sales, the increase in on-line trading, and whether there is a correlation between the two. The whole interview is very interesting and not too long, so I won't post excerpts. Just read it and enjoy.-- posted by DennisL
» litab16 - Health Care Funds
Jen,Here's an interesting story from SmartMoney on health care mutual funds to follow up on our recent chat discussion.
-- posted by litab16
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