Mutual fund expenses are down a tad; performance up a whole lot more
By Dian Vujovich
Mutual funds have plenty to crow about this year. Along with posting double-digit total returns for equity funds, fund expenses have also fallen—albeit not by much.
First, fund performance.
According to Lipper, the average U.S. Diversified Equity fund was up 10.16 percent at the end of the first quarter 2013. Additionally, sector funds were up on average about half as much (5 percent) and world equity funds about half of that (3.8 percent).
The fund type you wanted to own shares of to be the first quarter’s big winner was mid-cap value funds. They were up on average 13.74 percent. The one diversified equity fund category you wanted to stay away from was dedicated short-term bias funds. The average performance of this grouping was down 11.57 percent.
In the sector fund world, precious metals funds lost the most—down almost 17 percent. Health/biotech funds gained the most, 15.5 percent.
The biggest world equity fund gainers were Japanese funds, up on aver 12.75 percent. The losing group was India region funds; down on average7.5 percent.
If big funds are your style, 12 of the 25 largest funds had first quarter total returns of over 12 percent with the Dodge & Cox stock fund taking top honors—up 12.9 percent. The loser in this big fund group was the SPDR Gold fund, an ETF that was down over six percent for the quarter.
As for expenses, over the past five years the trend in fund fees and expenses has been a downward one. And that’s a good thing. Ever penny a fund shareholder pays in annual expenses dings their returns. Any expenses they pay in sales charges, i.e., sales loads, are one-time fees.
The Investment Company Institute (ICI) reported that the average expense ratio on equity funds fell to 77 basis points in 2012. That’s down two basis points from the previous year.
During the first quarter of 2013, a record 246 billion dollars was invested into stock, bond and exchange-traded funds (ETFs), according to Strategic Insight.
And all of the above is yesterday’s news.
Going forward what’s a fund investor to do? Next to praying that any double-digit positive gains will continue for the year, the wisest move that you can make is the one that serves your individual needs best.
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