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
94 BALCX American Funds American Balanced C 1.48% 7.06% NO -29.2% -6.1% -0.9%
91 PNOPX Putnam New Opportunities A 1.09% 6.97% YES -41.9% -13.1% -4.2%
51 PVOYX Putnam Voyager A 1.04% 6.92% YES -41.0% -14.1% -6.1%
82 GFACX American Funds Grth Fund of Amer C 1.50% 6.84% NO -42.3% -11.2% -1.9%
99 FRESX Fidelity Real Estate Investment 0.83% 6.70% NO -53.0% -19.5% -3.8%
69 DIVBX Morgan Stanley Dividend Growth Secs B 1.28% 6.57% NO -40.9% -12.2% -3.9%
60 TRBCX T. Rowe Price Blue Chip Growth 0.95% 6.55% NO -45.2% -12.8% -4.0%
78 PIODX Pioneer A 1.09% 6.26% YES -36.2% -8.0% -0.6%
90 FAEGX Fidelity Advisor Equity Growth T 1.32% 6.20% YES -48.7% -12.3% -5.4%
95 RYLPX Royce Low-Priced Stock Svc 1.49% 6.19% NO -44.2% -12.5% -3.4%
34 LMVTX Legg Mason Value Prim 1.70% 5.90% NO -59.9% -26.3% -12.8%
2 FMAGX Fidelity Magellan 0.70% 5.87% NO -53.4% -16.1% -6.7%
33 PGRWX Putnam Fund for Growth & Income A 0.90% 5.80% YES -42.3% -14.1% -4.8%
71 OPTFX Oppenheimer Capital Appreciation A 1.09% 5.70% YES -49.2% -15.3% -6.5%
100 GTVLX AIM Basic Value A 1.34% 5.50% YES -54.8% -19.6% -8.6%
52 VEXPX Vanguard Explorer 0.72% 5.40% NO -44.8% -14.5% -4.4%
16 FBGRX Fidelity Blue Chip Growth 0.67% 5.35% NO -40.3% -11.8% -4.4%
88 PRITX T. Rowe Price International Stock 0.92% 5.33% NO -54.2% -13.3% -2.7%
17 FDIVX Fidelity Diversified International 1.22% 5.19% NO -51.5% -10.4% 0.4%
58 FRSGX Franklin Small-Mid Cap Growth A 0.98% 5.13% YES -45.2% -13.4% -3.6%
83 FFFEX Fidelity Freedom 2030 0.77% 5.11% NO -40.5% -9.7% -1.8%
73 CSTGX AIM Constellation A 1.29% 5.08% YES -45.5% -14.0% -5.4%
54 PRGFX T. Rowe Price Growth Stock 0.76% 5.03% NO -45.0% -12.1% -3.3%
38 SMCWX American Funds Smallcap World A 1.12% 4.87% YES -53.6% -12.1% -1.3%
47 PTTAX PIMCO Total Return A 0.90% 4.77% YES 0.7% 4.5% 4.2%
65 ARTIX Artisan International Inv 1.22% 4.61% NO -53.1% -9.6% 0.4%
26 TEMFX Templeton Foreign A 1.23% 4.58% YES -50.8% -11.1% -1.4%
93 BJBIX Artio International Equity A 1.31% 4.49% NO -48.2% -6.1% 4.0%
27 LAFFX Lord Abbett Affiliated A 0.84% 4.48% YES -41.1% -10.4% -2.4%
80 MIGFX MFS Massachusetts Investors Gr Stk A 0.95% 4.22% YES -40.1% -10.8% -3.5%
48 ACRNX Columbia Acorn Z 0.80% 4.21% NO -43.4% -11.6% -0.3%
85 SNIVX Bernstein Tax-Managed Intl Port 1.24% 4.20% NO -54.3% -13.8% -2.7%
14 FEQIX Fidelity Equity-Income 0.70% 4.20% NO -44.5% -12.5% -3.3%
44 FFFDX Fidelity Freedom 2020 0.75% 4.16% NO -35.6% -7.9% -1.0%
40 FDVLX Fidelity Value 0.98% 4.16% NO -51.5% -16.7% -3.5%
72 PRNHX T. Rowe Price New Horizons 0.91% 4.14% NO -44.4% -14.7% -3.4%
76 ACGIX Van Kampen Growth and Income A 0.86% 4.09% YES -36.6% -8.7% 0.2%
25 PRFDX T. Rowe Price Equity Income 0.78% 4.08% NO -38.4% -9.1% -0.7%
19 TWCUX American Century Ultra Inv 1.00% 3.88% NO -43.2% -13.7% -5.3%
61 MSIQX Morgan Stanley Inst International Eq I 1.00% 3.81% NO -41.0% -6.3% 1.6%
62 OAKMX Oakmark I 1.05% 3.75% NO -38.9% -10.8% -4.0%
42 CVGRX Calamos Growth A 1.31% 3.74% YES -53.0% -16.6% -5.4%
98 OAKIX Oakmark International I 1.20% 3.73% NO -45.6% -10.0% 0.4%
97 FOSFX Fidelity Overseas 1.00% 3.73% NO -52.9% -10.1% -0.3%
3 AWSHX American Funds Washington Mutual A 0.64% 3.72% YES -35.5% -7.6% -1.0%
22 FDGFX Fidelity Dividend Growth 0.89% 3.70% NO -48.2% -15.5% -6.9%
23 PTRAX PIMCO Total Return Admin 0.68% 3.69% NO 0.9% 4.8% 4.4%
8 AEPGX American Funds EuroPacific Gr A 0.87% 3.61% YES -46.5% -6.9% 3.4%
63 ANEFX American Funds New Economy A 0.89% 3.59% YES -45.7% -11.1% -1.9%
31 RPMGX T. Rowe Price Mid-Cap Growth 0.87% 3.57% NO -44.6% -11.6% -0.9%
36 FFIDX Fidelity 0.59% 3.46% NO -42.2% -8.9% -1.5%
39 ACSTX Van Kampen Comstock A 0.90% 3.45% YES -41.4% -11.8% -2.2%
92 NBGEX Neuberger Berman Genesis Tr 1.10% 3.43% NO -34.6% -6.4% 3.1%
7 FLPSX Fidelity Low-Priced Stock 0.97% 3.41% NO -41.9% -11.2% -0.9%
57 ACEIX Van Kampen Equity and Income A 0.83% 3.32% YES -29.1% -5.8% 0.9%
87 JIEIX Artio International Equity I 1.02% 3.28% NO -48.0% -5.9% 4.3%
68 VQNPX Vanguard Growth & Income 0.42% 3.11% NO -41.0% -11.9% -3.1%
74 TFEQX Templeton Instl Foreign Equity 0.83% 3.10% NO -47.5% -6.1% 3.0%
96 HIADX Hartford Dividend & Growth HLS IA 0.69% 3.09% NO -36.3% -6.3% 0.8%
64 MSFRX MFS Total Return A 0.89% 3.08% YES -26.2% -4.7% 0.7%
67 FDCAX Fidelity Capital Appreciation 0.88% 3.07% NO -46.8% -12.6% -3.8%
30 AMCPX American Funds Amcap A 0.73% 3.03% YES -40.3% -11.5% -3.4%
32 AMRMX American Funds American Mutual A 0.62% 3.01% YES -32.8% -7.0% -0.4%
49 GFAFX American Funds Grth Fund of Amer F 0.72% 2.98% NO -41.9% -10.5% -1.1%
28 JANSX Janus 0.90% 2.93% NO -44.4% -11.5% -4.7%
45 FMCSX Fidelity Mid-Cap Stock 0.65% 2.92% NO -50.7% -15.2% -4.9%
9 FGRIX Fidelity Growth & Income 0.69% 2.91% NO -53.7% -20.2% -9.4%
29 FEQTX Fidelity Equity-Income II 0.64% 2.89% NO -42.8% -12.3% -3.8%
4 AGTHX American Funds Grth Fund of Amer A 0.70% 2.88% YES -41.9% -10.5% -1.1%
50 HAINX Harbor International Instl 0.86% 2.86% NO -49.5% -5.3% 4.4%
75 OAKLX Oakmark Select I 1.00% 2.81% NO -44.8% -17.1% -7.8%
41 HADAX Hartford Advisers HLS IA 0.67% 2.81% NO -35.5% -8.5% -2.4%
1 AIVSX American Funds Invmt Co of Amer A 0.59% 2.81% YES -37.5% -8.3% -1.1%
15 FPURX Fidelity Puritan 0.64% 2.80% NO -31.6% -6.0% -0.1%
66 HACAX Harbor Capital Appreciation Instl 0.67% 2.73% NO -39.5% -12.0% -2.3%
13 ABALX American Funds American Balanced A 0.67% 2.72% YES -28.7% -5.3% -0.1%
89 WOBDX JPMorgan Core Bond Select 0.60% 2.70% NO 2.0% 4.8% 4.2%
6 FCNTX Fidelity Contrafund 0.98% 2.70% NO -39.5% -7.3% 1.8%
20 ANCFX American Funds Fundamental Invs A 0.66% 2.67% YES -42.6% -8.1% 0.8%
55 OAKBX Oakmark Equity & Income I 0.92% 2.63% NO -18.9% 0.6% 4.4%
37 HIACX Hartford Capital Appreciation HLS IA 0.69% 2.41% NO -49.0% -11.3% 0.2%
35 FASMX Fidelity Asset Manager 50% 0.73% 2.38% NO -31.4% -7.1% -2.0%
70 DFSVX DFA U.S. Small Cap Value I 0.56% 2.32% NO -42.0% -14.8% -2.3%
5 PTTRX PIMCO Total Return Instl 0.43% 2.31% NO 1.2% 5.0% 4.7%
77 HSTAX Hartford Stock HLS IA 0.49% 2.25% NO -47.0% -13.6% -4.9%
53 LLPFX Longleaf Partners 0.91% 2.11% NO -57.2% -19.0% -9.3%
84 VWUSX Vanguard U.S. Growth 0.53% 1.84% NO -39.6% -12.9% -3.8%
86 FDETX Fidelity Advisor Capital Development O 0.55% 1.80% YES -45.0% -11.0% -3.2%
24 VWNDX Vanguard Windsor 0.39% 1.75% NO -46.4% -14.2% -4.8%
18 VPMCX Vanguard PRIMECAP 0.46% 1.69% NO -35.8% -7.0% 1.2%
21 DODBX Dodge & Cox Balanced 0.54% 1.52% NO -38.3% -10.0% -1.9%
59 DODIX Dodge & Cox Income 0.45% 1.36% NO -5.5% 1.6% 2.2%
56 VWIGX Vanguard International Growth 0.45% 1.36% NO -51.5% -9.4% 0.5%
10 CAIBX American Funds Capital Inc Bldr A 0.65% 1.35% YES -34.6% -3.5% 2.8%
43 PTLDX PIMCO Low Duration Instl 0.43% 1.22% NO -4.0% 2.5% 2.3%
11 VWNFX Vanguard Windsor II 0.36% 1.06% NO -41.2% -10.3% -0.6%
12 VWELX Vanguard Wellington 0.36% 0.94% NO -26.8% -2.9% 2.5%
81 VWNAX Vanguard Windsor II Adm 0.25% 0.47% NO -41.1% -10.2% -0.5%
79 VWENX Vanguard Wellington Adm 0.23% 0.34% NO -26.7% -2.8% 2.6%
Data updated as of: December 3, 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.