Actively Managed Mutual Fund
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Melvin Said:
What is the typical cost of a “loaded mutual fund†purchased by a full service broker or financial planner?We Answered:
You have a lot of questions here.The load is generally about 5.75% on the A shares. They do have different types of shares with different expense ratios and different loads.
There really is no typical expense for an ETF. They vary considerably from 0.15% to 3% and even more.
Again there is no typical annual expense for an open end mutual fund. The average is about 1.5%, but it varies greatly.
The S&P 500 contains companies with a market cap generally over about 4 bil. But some have lost considerable market cap lately.
About 70% underperform the indices for a given year. Something like that.
Kristin Said:
Can you vote any shares you own through a mutual fund?We Answered:
No, mutual fund holders can't vote on matters concerning the companies held in the fund.. it's a privilege that direct shareholders have. Most funds are composed of many, many stocks...maybe over a hundred of them. Can you imagine what it would be like to send reports/voting slips on each company to each fund holder?Willie Said:
Is it better to invest in a Mutual Fund of ETF?We Answered:
An ETF and a mutual Fund are very similar investments. An S&P 500 mutual fund and S&P 500 ETF would have very similar returns - maybe over a ten yr period the ETF being superior with the smaller expense ratio. In general an ETF would have a brokerage charge so consider this as a load fee unless your brokerage doesn't charge for instance if you have Schwab or Fidelity and are buying their ETF's. Try to compare apples to apples with expense ratios, load and commission fees.In general, active managed funds can't outperform indexes since managers trade more which create tax consequences or possible losses. You would only want to invest in superior portfolio managers with proven track records. This would probably cost more however would hopefully payoff with better returns. International ETF's in my opinion are great investments since they can offer low expense ratios to markets like China or Brazil.
In reality, you investment philosopy should guide you in picking your funds. ETF's are not as numerous so shouldn't be your only investments. For instance, it's hard to find technology ETF's or certain sector funds. commodity or leverage or inverse funds that pay off when the market goes down. If your a trader and like to go in and out of investments ETF's are probably better for you since you can trade them during market hours. However when it comes down to is return, risk and costs. Design a portfolio that will give you the greatest chance of making money for instance with a breadth of diversification with bonds, small cap, microcap, medium and large companies along with International and Emerging markets.
If you have one choice go with VT or Vanguards ETF for the Total World Stock Market which will give you all these categories with mostly American stock markets of: NASDAQ, American and NYSE and then Europe, Latin America, Canada, Asia and the emerging markets. Good luck!
Fernando Said:
choosing between managed fund and index fund.?We Answered:
Index fund con: With an index fund, you are guaranteed never to beat the market. You will always match the comparable market less the index fees taken out.Index fund pro: You don't have to worry about keeping close track of the fund (in case of manager change or change in fees, loads, manner of investing etc.). You are guaranteed never to do much worse than the market. You get wide diversification for less risk.
Managed fund con: The past has shown about 75% have done worse than a comparable index fund. You have a 3 to 1 chance of picking a bad fund if you don't know what you are doing.
Managed fund pro: With a managed fund, in the past about 75% have done worse than index funds. That means 25% have either matched or beaten index funds. A good no-load, low-fee managed fund that has beaten index funds over the past 10 years or so (It doesn't have to beat the index every year to do better overall) are not that hard to find if you know a bit about investing.