Mutual Funds - General Discussion

Top 4. Jun 3, 1999 5:50 PM

» litab16 - Another down year shaping up

It's not looking good for mutual funds again this year. According to today's article posted at Bloomberg:

"Almost 22 percent of diversified domestic stock funds, or 773 of 3,531 funds, were down this year at last night's close, according to researchers at Morningstar Inc.

"The average decline of the 773 funds was 3.8 percent in a period when the Standard & Poor's 500 Index gained 4.8 percent. The proportion of declining funds is higher than all of last year when 19 percent, or 614 of 3,200 U.S. stock funds, fell. ``These are pretty sizable numbers and it's a reminder that this isn't a uniform bull market,'' said John Rekenthaler, Morningstar's director of research.

"Three-quarters of all U.S. stock funds are performing worse than S&P 500 so far this year."

If you would like to read the full story, go to Bloomberg's site.

-- posted by litab16

http://dowjones.wsj.com/n/SB928497398308...

Top 5. Jun 4, 1999 6:41 AM

» litab16 - Mutual Funds and On-line Trading

Most mutual funds companies are still resisting on-line trading of their funds. The three biggest are finding considerable customer acceptance.

Schwab says 42% of fund transactions are on-line up from 18% two years ago. Fidelity reports 31% of its trades are on-line or 10,000 per day.
Vanguard reports 30% - they were the last of the three to provide on-line access.

-- posted by litab16

Top 6. Jun 4, 1999 7:45 AM

» litab16 - Profits on Online Mutual Fund Trading

Kirk,

Good point Kirk. The 10,000 trades were actually Fidelity's numbers. Since both Schwab and Vanguard have even higher numbers, I'll bet their take per day is higher. I don't think any of them charge for trades within their funds group, so your figures might be a little high.

-- posted by litab16

Top 7. Jun 4, 1999 7:50 AM

» JenL_3 - On-line Trading of Mutual Funds at Schwab

Kirk - The $29.95 trading fee at Schwab is only for individual stock trades. As long as you buy no-load mutual funds on the Schwab One-Source list, and hold for a minimum of 180 days, there is no fee on buying or selling.

But if you buy a no-load fund outside of the One-Source list, such as a Vanguard fund, you have to pay a minimum of $39.00 per trade (with a 20% discount for trading on-line), unless you buy $5000 worth or more, then you pay 0.7% of the principle. You have to pay that fee for both buying and selling funds outside of the Schwab One-Source list. But there are a lot of funds on the Schwab One-Source List. The Schwab One-Source List is available in print form from Schwab (800-435-4000) or at the Schwab website:

http://www.Schwab.com

Here is an excerpt from the Schwab site:

About Schwab's Mutual Fund OneSource® Service

Schwab's Mutual Fund OneSource service includes over 1,000 no-load mutual funds from many of America's most prominent fund families all available without transaction fees. (Short-term redemption fees may apply).

......Jen

-- posted by JenL_3

Top 8. Jun 4, 1999 8:26 AM

» litab16 - Scwab

Jen,

I thought about use One Source, but they say they have no intention of ever offering Vanguard, because they see them as a key competitor. Vanguard has the lowest cost of operating for index funds .19% vs. .5% or higher a Schwab. This can really add up for a long term investment. Check out the mutual fund cost calculator at www.smartmoney.com to see the long term impact.

-- posted by litab16

Top 9. Jun 4, 1999 8:37 AM

» JenL_3 - Schwab vs. Vanguard

Thanks Lita - Here's some questions for comparison:

Can you have multiple IRA accounts, plus other taxable accounts at Vanguard, all with no fees for setting up and maintaining the accounts? You can at Schwab.

Can you trade Janus funds or American Century funds, or any of the funds on Schwab's One Source list without any fees for buying or selling?

Can you make fund trades on-line or by phone whenever you want in any account, IRA as well as taxable accounts?

Can you do individual stock trading on-line or by phone at Vanguard in your IRA or other accounts? And what is the fee per stock trade at Vanguard?

Can you walk up to a Vanguard office in most big towns, and talk to a real person?

Can you set up money-link automatic bank transfers with Vanguard?

Thanks for the comparison....Jen

-- posted by JenL_3

http://www.vanguard.com/vbs/services/com...

Top 10. Jun 4, 1999 9:21 AM

» litab16 - Comparison Vanguard & Schwab

Jen,

There is no doubt the Schwab's one source has the lower transaction costs, but again that is a one time fee. It's the longer term operating fees that eat up an investment.

Here are Vanguard brokerage's fees:

I do have both an IRA and a 403B at Vanguard and could have a taxable account if I wanted one. I think the yearly fee for the IRA is $10 or $12. I do have online as well as phone access for my accounts. Can't walk into an office though. Automatic bank transfers are possible.

I have separate accounts at Vanguard and Janus to avoid transaction costs, but toy with the idea of moving everything under one umbrella with a brokerage house so I can add individual stocks to my retirement mix.

-- posted by litab16

http://www.litabryna.com/beyondbell6.htm

Top 11. Jun 4, 1999 9:25 AM

» litab16 - Mutual Fund Fees

Here's the column I did on the long term impact of mutual fund fees:

-- posted by litab16

Top 12. Jun 4, 1999 9:41 AM

» Thruhiker - Cmon Lita

Lita, you don't have to convince me that Vanguard has the absolute rock bottom expenses - they do - but the Schwab expense ratios you gave are waaay off. Actual Schwab Select Shares expense ratios are:

0.19 SP 500
0.35 Schwab 1000
0.27 Schwab Total Market

Much more reasonable than "over 0.50".

I have gone back and forth on the advantages of Vanguard v Schwab on several occasions. There is no "right" answer. The additional customer service you get at Schwab is worth a sliver of higher expense for some people. For others it is not.

-- posted by Thruhiker