How to compare funds?

[smooch]

I am trying to find Vanguard Funds in the same asset classes as our current portfolio. For example, we have Merrill Lynch Basic Value I (MABAX), which is a Large Cap Value fund. We did not pay the front end load, because we were in the Merrill Lynch MFA program (and I can’t remember what that stood for - we got out). So this fund has an expense ratio of .56%. Are there other expenses here that I’m not seeing?

The 2005 return is -4.3, 2004 was 10.5, 2003 was 32.7, 2002 was -16.8, according to Morningstar. On the Vanguard site, how can I find all Large Cap Value funds? Then, it is difficult to compare them because Morningstar uses calendar year for returns and Vanguard uses 1 year, 5 years,etc, but I think these are from the current date.

Also, what is the difference between total return and trailing return?

Thanks for any help you can give me with this. My goal is to take one Merrill Lynch fund at a time and find low fee alternatives that are doing as well or better.

 

[ats5g]

Vanguard to the rescue. You can use their Find Similar Vanguard Funds: Use this tool to find Vanguard funds similar to funds from the more than 300 fund families offered through our FundAccess® program. Choose a fund family, and then select a fund to see the list of Vanguard funds in the same asset class and category.

I used it to do MABAX - Vanguard only had the class A shares.

You can also use Morningstar's Fund Compare Tool.

Trailing Return is usually the return from the current date. For example, Morningstar uses the current day as the date to start the trailing returns from. It looks like they do Year to date return, 1 year return from today, 3 year annualized return from today, 5 year annualized return from today.

Total return is related to annualized return [and thus trailing annualized return] using this formula:

1 + Total Return = [1 + annualized return] ^ [years]

also 1 + Total Return is also called Cumulative Return.

So for VIVAX the three year trailing annualized return is 7.40%, and the three year trailing total return would be:

1 + TR = [1 + 7.40%] ^ [3]

or TR = ([1 + 7.40%] ^ [3]) - 1

- Alec

 

[BUM]

Hi smooch

Just a thought.. I can see the logic in switching into lower fee funds one at a time. However this might be the time to look at the forrest instead of the trees. You are not comfortable with your broker. Are you comfortable with the existing allocation?

Instead of switching a hypothetical six or seven funds one at a time, over a period of weeks or months, perhaps a complete liquidation into a VG money market is easier. Then buy in according to your new asset allocation plan.

With the exception of a few individual stocks (which were transferred) thats exactly how I exited from Merril.

BUM

 

[smooch]

Thank you both. Actually, I am very comfortable with the financial planner and the asset allocation. She taught me about asset allocation. What I am trying to determine is the effect that the fees are having on our returns. So far, I think our returns have been good, but I want to be sure. Also, as I learn more, if the returns are not good, I want to have alternatives that I can control.

Bum, may I ask why you decided to switch from Merrill?

 

[BUM]

I switched for 2 reasons.

1. It was time to realign everything as we transitioned from accumulation to distribution phase. ML had a few funds that I could have transitioned without restarting the "load clock" but other funds I was interested in would have been fully loaded. With VG I have access to non-VG funds many of which have no transaction fees and very low annual fees. An example is PCRIX. This is an institutional fund with a minimum investment of $5,000,000 However thru VG I was able to buy in with a minimum investment of a few thousand and I think the $35 transaction fee was waived.

When things are great the MLynch fees can get lost in the gains and divvies. BUT during tighter times the fees can rival or surpass gains. If tighter times endure only the broker makes money.

2. After reading Bernstein I came to believe that broker is not interested in my future. He is interested in his future and my fees are keys for his success. Fox in charge of the hen house stuff.

I havent regretted my decision

BUM