CNNMoney.com

Companies Economy International Corrections Pre-market Trading After-hours Trading Winners/Losers/Actives Bonds Currencies Commodities World Markets Money Magazine Real Estate Mutual Funds Taxes Ask the Expert Money 101 Autos Loan Center Best Places to Live Ask the Expert Millionaires in the Making Ultimate Guide to Retirement Retirement Calculators Best Funds Ask the Mole Best Places to Retire Personal Tech Big Tech Blog Techland Blog Sectors and Stocks Fortune 500 Techs Tech Talk 100 Best Places to Launch Ultimate Resource Guide Small Biz Makeovers FSB 100 Ask & Answer Fortune 500 Technology Investing Management 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
5 PTTRX PIMCO Total Return Instl 0.43% 2.31% NO 1.4% 5.0% 4.6%
89 WOBDX JPMorgan Core Bond Select 0.60% 2.70% NO N/A% 4.8% 4.3%
23 PTRAX PIMCO Total Return Admin 0.68% 3.69% NO 1.1% 4.8% 4.4%
47 PTTAX PIMCO Total Return A 0.90% 4.77% YES 0.9% 4.5% 4.2%
43 PTLDX PIMCO Low Duration Instl 0.43% 1.22% NO -3.9% 2.5% 2.3%
59 DODIX Dodge & Cox Income 0.45% 1.36% NO -5.4% 1.6% 2.2%
55 OAKBX Oakmark Equity & Income I 0.92% 2.63% NO -19.5% 0.3% 4.2%
79 VWENX Vanguard Wellington Adm 0.23% 0.34% NO -27.7% -3.3% 2.4%
12 VWELX Vanguard Wellington 0.36% 0.94% NO -27.8% -3.4% 2.2%
10 CAIBX American Funds Capital Inc Bldr A 0.65% 1.35% YES -35.2% -3.7% 2.6%
64 MSFRX MFS Total Return A 0.89% 3.08% YES -27.2% -5.1% 0.5%
50 HAINX Harbor International Instl 0.86% 2.86% NO -50.0% -5.5% 4.4%
13 ABALX American Funds American Balanced A 0.67% 2.72% YES -29.8% -5.8% -0.4%
87 JIEIX Artio International Equity I 1.02% 3.28% NO -48.2% -5.9% 4.4%
74 TFEQX Templeton Instl Foreign Equity 0.83% 3.10% NO -47.5% -6.1% 3.1%
93 BJBIX Artio International Equity A 1.31% 4.49% NO -48.4% -6.2% 4.1%
57 ACEIX Van Kampen Equity and Income A 0.83% 3.32% YES -30.2% -6.3% 0.6%
94 BALCX American Funds American Balanced C 1.48% 7.06% NO -30.4% -6.5% -1.2%
15 FPURX Fidelity Puritan 0.64% 2.80% NO -32.8% -6.5% -0.4%
61 MSIQX Morgan Stanley Inst International Eq I 1.00% 3.81% NO -41.8% -6.7% 1.5%
92 NBGEX Neuberger Berman Genesis Tr 1.10% 3.43% NO -35.6% -6.8% 2.6%
96 HIADX Hartford Dividend & Growth HLS IA 0.69% 3.09% NO -37.8% -7.0% 0.4%
8 AEPGX American Funds EuroPacific Gr A 0.87% 3.61% YES -47.0% -7.0% 3.3%
35 FASMX Fidelity Asset Manager 50% 0.73% 2.38% NO -32.3% -7.5% -2.2%
32 AMRMX American Funds American Mutual A 0.62% 3.01% YES -34.4% -7.6% -0.7%
18 VPMCX Vanguard PRIMECAP 0.46% 1.69% NO -37.7% -7.8% 0.5%
6 FCNTX Fidelity Contrafund 0.98% 2.70% NO -41.0% -7.9% 1.3%
44 FFFDX Fidelity Freedom 2020 0.75% 4.16% NO -36.7% -8.3% -1.4%
3 AWSHX American Funds Washington Mutual A 0.64% 3.72% YES -37.5% -8.4% -1.5%
78 PIODX Pioneer A 1.09% 6.26% YES -38.0% -8.7% -1.0%
20 ANCFX American Funds Fundamental Invs A 0.66% 2.67% YES -43.9% -8.7% 0.4%
1 AIVSX American Funds Invmt Co of Amer A 0.59% 2.81% YES -39.0% -8.9% -1.4%
41 HADAX Hartford Advisers HLS IA 0.67% 2.81% NO -36.8% -9.0% -2.8%
76 ACGIX Van Kampen Growth and Income A 0.86% 4.09% YES -38.3% -9.4% -0.3%
56 VWIGX Vanguard International Growth 0.45% 1.36% NO -52.1% -9.6% 0.5%
36 FFIDX Fidelity 0.59% 3.46% NO -44.0% -9.7% -2.1%
65 ARTIX Artisan International Inv 1.22% 4.61% NO -53.6% -9.8% 0.4%
25 PRFDX T. Rowe Price Equity Income 0.78% 4.08% NO -40.2% -9.8% -1.2%
98 OAKIX Oakmark International I 1.20% 3.73% NO -46.2% -10.2% 0.3%
83 FFFEX Fidelity Freedom 2030 0.77% 5.11% NO -41.8% -10.3% -2.2%
97 FOSFX Fidelity Overseas 1.00% 3.73% NO -53.8% -10.5% -0.4%
21 DODBX Dodge & Cox Balanced 0.54% 1.52% NO -39.4% -10.5% -2.2%
17 FDIVX Fidelity Diversified International 1.22% 5.19% NO -52.0% -10.7% 0.4%
26 TEMFX Templeton Foreign A 1.23% 4.58% YES -50.3% -10.8% -1.2%
81 VWNAX Vanguard Windsor II Adm 0.25% 0.47% NO -43.0% -11.0% -1.0%
4 AGTHX American Funds Grth Fund of Amer A 0.70% 2.88% YES -43.2% -11.0% -1.5%
49 GFAFX American Funds Grth Fund of Amer F 0.72% 2.98% NO -43.2% -11.0% -1.5%
11 VWNFX Vanguard Windsor II 0.36% 1.06% NO -43.0% -11.1% -1.1%
80 MIGFX MFS Massachusetts Investors Gr Stk A 0.95% 4.22% YES -41.7% -11.4% -3.9%
27 LAFFX Lord Abbett Affiliated A 0.84% 4.48% YES -43.5% -11.5% -3.2%
63 ANEFX American Funds New Economy A 0.89% 3.59% YES -46.9% -11.5% -2.2%
82 GFACX American Funds Grth Fund of Amer C 1.50% 6.84% NO -43.6% -11.7% -2.2%
62 OAKMX Oakmark I 1.05% 3.75% NO -41.2% -11.8% -4.7%
86 FDETX Fidelity Advisor Capital Development O 0.55% 1.80% YES -47.0% -11.8% -3.8%
7 FLPSX Fidelity Low-Priced Stock 0.97% 3.41% NO -43.5% -11.9% -1.4%
37 HIACX Hartford Capital Appreciation HLS IA 0.69% 2.41% NO -50.4% -12.0% -0.2%
30 AMCPX American Funds Amcap A 0.73% 3.03% YES -41.9% -12.1% -3.9%
28 JANSX Janus 0.90% 2.93% NO -46.0% -12.2% -5.2%
31 RPMGX T. Rowe Price Mid-Cap Growth 0.87% 3.57% NO -46.0% -12.2% -1.5%
48 ACRNX Columbia Acorn Z 0.80% 4.21% NO -45.0% -12.3% -1.0%
38 SMCWX American Funds Smallcap World A 1.12% 4.87% YES -54.2% -12.4% -1.6%
39 ACSTX Van Kampen Comstock A 0.90% 3.45% YES -43.4% -12.6% -2.8%
16 FBGRX Fidelity Blue Chip Growth 0.67% 5.35% NO -42.4% -12.6% -5.0%
68 VQNPX Vanguard Growth & Income 0.42% 3.11% NO -42.8% -12.7% -3.7%
66 HACAX Harbor Capital Appreciation Instl 0.67% 2.73% NO -41.6% -12.8% -2.8%
54 PRGFX T. Rowe Price Growth Stock 0.76% 5.03% NO -46.9% -12.9% -3.9%
69 DIVBX Morgan Stanley Dividend Growth Secs B 1.28% 6.57% NO -42.7% -13.0% -4.4%
95 RYLPX Royce Low-Priced Stock Svc 1.49% 6.19% NO -45.5% -13.0% -3.9%
90 FAEGX Fidelity Advisor Equity Growth T 1.32% 6.20% YES -50.0% -13.1% -5.9%
29 FEQTX Fidelity Equity-Income II 0.64% 2.89% NO -44.7% -13.1% -4.3%
14 FEQIX Fidelity Equity-Income 0.70% 4.20% NO -46.4% -13.3% -3.8%
67 FDCAX Fidelity Capital Appreciation 0.88% 3.07% NO -48.5% -13.3% -4.3%
88 PRITX T. Rowe Price International Stock 0.92% 5.33% NO -54.5% -13.4% -2.7%
84 VWUSX Vanguard U.S. Growth 0.53% 1.84% NO -41.5% -13.6% -4.3%
60 TRBCX T. Rowe Price Blue Chip Growth 0.95% 6.55% NO -47.2% -13.6% -4.6%
91 PNOPX Putnam New Opportunities A 1.09% 6.97% YES -43.5% -13.8% -4.8%
58 FRSGX Franklin Small-Mid Cap Growth A 0.98% 5.13% YES -46.2% -13.9% -4.0%
85 SNIVX Bernstein Tax-Managed Intl Port 1.24% 4.20% NO -54.9% -13.9% -2.7%
77 HSTAX Hartford Stock HLS IA 0.49% 2.25% NO -48.8% -14.3% -5.4%
73 CSTGX AIM Constellation A 1.29% 5.08% YES -47.0% -14.5% -5.8%
19 TWCUX American Century Ultra Inv 1.00% 3.88% NO -45.0% -14.5% -6.0%
51 PVOYX Putnam Voyager A 1.04% 6.92% YES -42.8% -14.8% -6.7%
33 PGRWX Putnam Fund for Growth & Income A 0.90% 5.80% YES -44.0% -14.8% -5.3%
24 VWNDX Vanguard Windsor 0.39% 1.75% NO -48.0% -14.9% -5.3%
52 VEXPX Vanguard Explorer 0.72% 5.40% NO -46.6% -15.2% -5.2%
72 PRNHX T. Rowe Price New Horizons 0.91% 4.14% NO -45.9% -15.3% -4.1%
70 DFSVX DFA U.S. Small Cap Value I 0.56% 2.32% NO -44.5% -15.6% -3.1%
71 OPTFX Oppenheimer Capital Appreciation A 1.09% 5.70% YES -50.6% -15.9% -7.0%
45 FMCSX Fidelity Mid-Cap Stock 0.65% 2.92% NO -52.1% -16.0% -5.6%
22 FDGFX Fidelity Dividend Growth 0.89% 3.70% NO -50.1% -16.3% -7.4%
2 FMAGX Fidelity Magellan 0.70% 5.87% NO -54.5% -16.7% -7.2%
42 CVGRX Calamos Growth A 1.31% 3.74% YES -54.5% -17.3% -6.3%
40 FDVLX Fidelity Value 0.98% 4.16% NO -53.0% -17.4% -4.0%
75 OAKLX Oakmark Select I 1.00% 2.81% NO -47.0% -18.4% -8.7%
53 LLPFX Longleaf Partners 0.91% 2.11% NO -58.1% -19.5% -9.7%
100 GTVLX AIM Basic Value A 1.34% 5.50% YES -56.4% -20.3% -9.2%
99 FRESX Fidelity Real Estate Investment 0.83% 6.70% NO -55.7% -20.8% -4.8%
9 FGRIX Fidelity Growth & Income 0.69% 2.91% NO -55.7% -21.1% -10.0%
34 LMVTX Legg Mason Value Prim 1.70% 5.90% NO -60.9% -26.8% -13.3%
Data updated as of: December 2, 2008
Top of page

© 2008 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 © 2008 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.