How to Find Value in No Load Mutual Fund Investing

What are you thinking when it comes to your no load mutual fund

selections? Are you saving pennies and sacrificing dollars?

Are you spending your time looking at expense ratios, analyzing

Morningstar ratings and searching for funds with low fees and no

12b1 charges?

If you are like most people, you know these things in and out.

You’ve spent hours evaluating them, and your chosen mutual funds

cost little to purchase and maintain. But they still don’t

perform to your hopes and expectations.

So, why is this happening? Because this kind of investing

focuses on cost as opposed to value.

Investors with this philosophy have usually interviewed numerous

advisors. But instead of trying to find someone suitable with a

sensible approach, they only want to know who has the lowest

fees. That’s like going to the cheapest auto repair shop and

getting the best price, but your car still doesn’t run well.

Then there are the investors who call or email me wanting a

recommendation on a no load mutual fund. They want one with no

12b1 charge, but they completely ignore the issue of how the

fund might perform.

Both these kinds of investors spend their time trying to save

pennies and in the process they are losing dollars. Instead of

falling into the penny wise, dollar foolish trap, here are some

ideas that will assist you in evaluating the end profit rather

than just the short term saving.

1. Shift your focus from penny pinching to looking at the big

picture: What can a mutual fund or an advisor do for you, not

how much does it cost? Why? If you buy a given no load mutual

fund at the right time and it gains a tidy 15% for you over a 6

week period, would you really care about the costs? If a mutual

fund-or an advisor for that matter-can give you superior

performance and an increase of several percentage points over

your bargain price pick wouldn’t you pay an extra 0.25%?

2. Consider finding a fee-based investment advisor who uses a

facts-based methodology and has a track record indicating those

kinds of returns. For example, in my own practice I used a trend

tracking approach to get my clients into the market on April 29,

2003. Plus, our research and homework led us to recommending

funds that gained anywhere from 11.50% to 22.00% over the

following 6 week period. How did you do during that time? Do you

think any of my clients care whether one of these funds has a

small 12b 1 charge? Or whether they have the lowest expense

ratios in the industry? I know they don’t. (If you are looking

for an advisor, please see my article “How to find an Investment

Advisor” at http://www.successful-investment.com/articles18.htm)

The bottom line is to look at costs as balanced by performance

and that’s where you find value. Then seek true value not simple

savings, enjoy healthy dollar-level returns and don’t sweat the

pennies.

What are you thinking when it comes to your no load mutual fund

selections?

This kind of investing focuses on cost as opposed to value.Investors with this philosophy have usually interviewed numerous advisors. But instead of trying to find someone suitable with a sensible approach, they only want to know who has the lowest fees. That’s like going to the cheapest auto repair shop and getting the best price, but your car still doesn’t run well.

Then there are the investors who call or email me wanting a recommendation on a no load mutual fund. They want one with no 12b1 charge, but they completely ignore the issue of how the fund might perform.

Both these kinds of investors spend their time trying to save pennies and in the process they are losing dollars. Instead of falling into the penny wise, dollar foolish trap, here are some ideas that will assist you in evaluating the end profit rather than just the short term saving.

1. Shift your focus from penny pinching to looking at the big picture: What can a mutual fund or an advisor do for you, not how much does it cost? Why? If you buy a given no load mutualfund at the right time and it gains a tidy 15% for you over a 6 week period, would you really care about the costs? If a mutual fund-or an advisor for that matter-can give you superior performance and an increase of several percentage points over your bargain price pick wouldn’t you pay an extra 0.25%?

2. Consider finding a fee-based investment advisor who uses a facts-based methodology and has a track record indicating those kinds of returns.

The bottom line is to look at costs as balanced by performance and that’s where you find value. Then seek true value not simple savings, enjoy healthy dollar-level returns and don’t sweat the pennies.