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For those who like to get on M*'s case, here's a good fund to use. M* rates its ER as "low" (compared with peers, which in this case I believe is large cap blend funds sold with a load).
One part of that does make some sense (IMHO) - load funds tend to carry 12b-1 fees, so its 12b-1 fee is in line with that of its fellow load funds. But evaluating the ER of an index fund along with those of actively managed funds is more questionable.
For S&P 500 index funds (but only for those index funds), Lipper has a separate classification. Among those funds, Lipper rates the ER of this fund 2 (higher than average expense). Thus raising the curiosity question - you mean there are more expensive S&P 500 index funds out there?
The answer is yes! Surprisingly, one is even given in the linked blog: MYSPX, the Investor share class of the same fund. Lots of other families, including Rydex (RYSOX), with an even higher load (4.75%), and a whopping 1.57% ER. But don't worry, you can buy the fund without the load as a class H fund (RYSPX), albeit with a nearly identical ER. And M* does call those ERs "high".
If for some reason you should want MSXAX, you can purchase it load-waived as well through Vanguard. Vanguard's page also reports that the ER of this fund is low, amounting to just 60% that of its category average. Again, the problem is the category in which the fund is placed.
For an imposible sale ... It seems a good number of investors have purchased the subject fund, MSXAX, with total assets listed at 2.1 Billion dollars. Perhaps they are captive buyers.
@msf- that "category in which the fund is placed" issue seems to be at the core of many of the negative comments re M*. To be fair, if I put myself in M*'s position, I'm looking at thousands of funds, many of which "pretty much fit" an existing template. If I keep inventing new categories, after a while that becomes meaningless also, since everyone will start hollering that "they're different" and deserve a special category of their own. Seems like a "can't win", to an extent.
Still a lot of uninformed folks who are paying loads for the benefit of having an advisor run the investments for them, eh?
I know of three married couples who are using full service advisors. I have asked and they don't know much about their investments, but that they are paying a 1.5% fee, plus buying the the front loaded funds.
I have talked with these folks over the years and none of them had any interest in learning even the most basic functions of investing in funds. In both cases, available time was not a factor.
Another, oh well moment. At the least, they are providing an income for another, who in turn spends the income back into the economy.
Don't need to google, just based on family and friends around Boston and elsewhere across country, all of their paid advisers, franchise or indy, ensure no loads are paid on any mutual funds, including load funds. MS, ML, UBS, Commonwealth, private firms, et alia. I am sure that some people do get doubly screwed with the 1% plus some load, why I wrote 'typically'. But typically not.
@Old_Joe - I dug up M*'s grouping of funds for the purpose of rating expenses (average, high, low, etc.). As I recall, David had commented in the past that M* uses a different system than for its star ratings, and that's correct: http://news.morningstar.com/articlenet/article.aspx?id=371758
Since M* is already acknowledging that funds need to be sliced and diced differently when comparing fees (e.g. separating front load from institutional from retail), I felt it was fair to comment on this particular classification system.
But it is the star rating categories (different classification system) that some people (as you note) tend to complain about. Also as you suggest, if one tries to slice things too finely, the groups are too small to be meaningful. That's not true when grouping index funds - in any category these days, there seem to be a plethora of them.
@Old_Skeet - I looked into the class breakdown. According to the latest annual report, about $1.5B of the $2.1B total is invested in institutional (no load) shares. About 95% of the remainder is invested in the class A shares MSXAX.
Comments
One part of that does make some sense (IMHO) - load funds tend to carry 12b-1 fees, so its 12b-1 fee is in line with that of its fellow load funds. But evaluating the ER of an index fund along with those of actively managed funds is more questionable.
For S&P 500 index funds (but only for those index funds), Lipper has a separate classification. Among those funds, Lipper rates the ER of this fund 2 (higher than average expense). Thus raising the curiosity question - you mean there are more expensive S&P 500 index funds out there?
The answer is yes! Surprisingly, one is even given in the linked blog: MYSPX, the Investor share class of the same fund. Lots of other families, including Rydex (RYSOX), with an even higher load (4.75%), and a whopping 1.57% ER. But don't worry, you can buy the fund without the load as a class H fund (RYSPX), albeit with a nearly identical ER. And M* does call those ERs "high".
If for some reason you should want MSXAX, you can purchase it load-waived as well through Vanguard. Vanguard's page also reports that the ER of this fund is low, amounting to just 60% that of its category average. Again, the problem is the category in which the fund is placed.
I know of three married couples who are using full service advisors. I have asked and they don't know much about their investments, but that they are paying a 1.5% fee, plus buying the the front loaded funds.
I have talked with these folks over the years and none of them had any interest in learning even the most basic functions of investing in funds. In both cases, available time was not a factor.
Another, oh well moment. At the least, they are providing an income for another, who in turn spends the income back into the economy.
Google links regarding advisors and fees, if you feel inclinced and have a few spare moments.
Hey, take care,
Catch
http://news.morningstar.com/articlenet/article.aspx?id=371758
Since M* is already acknowledging that funds need to be sliced and diced differently when comparing fees (e.g. separating front load from institutional from retail), I felt it was fair to comment on this particular classification system.
But it is the star rating categories (different classification system) that some people (as you note) tend to complain about. Also as you suggest, if one tries to slice things too finely, the groups are too small to be meaningful. That's not true when grouping index funds - in any category these days, there seem to be a plethora of them.
@Old_Skeet - I looked into the class breakdown. According to the latest annual report, about $1.5B of the $2.1B total is invested in institutional (no load) shares. About 95% of the remainder is invested in the class A shares MSXAX.