There’s more to picking funds than knowing the numbers. But studying the figures -- returns, fees and others -- is a great way to start. These numbers are also useful in showing how funds you already own measure up to their peers.
To limit the number of funds in our tables, we measure asset size. We’ve also left out funds that are less than a year old and that require a minimum investment of $100,000 or more. In general, the share class we choose is the biggest one that is open to new investors. We also exclude funds that are sold only to special groups or institutional investors, or that are available only through IRAs.
Measures the change in value, assuming that dividends and capital-gains distributions were reinvested. Returns for three-, five- and ten-year periods are annualized—that is, stated on an average annual basis. Returns are for periods through June 30, 2013. A dash in a three-, five- or ten-year column means the fund hasn’t existed that long.
Describes U.S. stock funds by the kinds of companies they invest in most heavily. Companies are divided into large (with a stock-market value in the largest 70% of stocks), small (the smallest 10%) and midsize, and they are characterized as rapidly growing, undervalued or a blend of the two. Nine styles derive from these elements: LarGro, LarBlnd, LarVal, MidGro, MidBlnd, MidVal, SmlGro, SmlBlnd and SmlVal. Other styles: Bear Market, Commodities, Financial, Health, Metals, Natural Resources, Realty, Technology, Utilities, Long-Short (funds that use short selling to limit losses), Misc (miscellaneous categories), Special (Merger fund and Arbitrage fund), and Hybrid (balanced, convertible-bond and asset-allocation funds).
Sector and specialized funds are categorized into the following styles:
Bear Mkt (bear market) funds make bets against certain types of investments; Commod (commodity) funds track the prices of commodities; Hybrid funds include balanced, convertible-bond and asset-allocation funds; LngShrt (long-short) funds own stocks and also sell them short, a bet on falling prices (the percentage of assets in long and short positions may vary); and MultiAlt for multi-alternative funds. MkNeutral (market neutral) funds seek to reduce risk by matching short positions, a bet on falling prices, with long positions (they may, for example, seek to neutralize the impact of overall stock-market swings by establishing short positions equal to their "long" stock holdings. Plus, sector funds are divided into four categories based on the sector in which they are most heavily invested: Health, NatrlRsc (natural resources), Realty,Tech (technology) and Utilities.
International stock funds have substantial overseas holdings and are divided into eight categories: Divers (diversified) funds invest primarily in stocks of larger companies based outside of the U.S. DivSmMid (diversified small and midsize) funds concentrate on small and midsize foreign companies. DivEM (diversified emerging markets) funds invest in a variety of developing markets. Regional funds invest in one area and SngCntry (single country) funds invest in stocks of just one country. Realty funds invest in foreign-based real estate companies. Global funds may invest in the U.S. as well as overseas.
Shows performance for each of the past five years, compared with other mutual funds using the same investment style. Funds are ranked 1 (top 10%) to 10. A decile rank of 5 or 6 is average. The decile ranking offers a quick gauge of how a fund performed compared with its peers.
Down marketFor the stock market, we show performance in the 2011 down market between April 29 and October 3, when the broad market fell 18.6%.
Measures volatility among all stock and bond funds on a scale of 1 (least volatile) to 10. The higher the volatility, the greater the potential for gain or loss.
Shows the amount of money invested in the fund. If a fund has multiple share classes, we report the assets for all of the classes combined.
Shows how long the manager (or if there’s more than one, the longest-tenured manager) has been on board.
Tells how much it takes to open an account.
Tells you the highest sales fee for buying shares. A figure without a footnote means the commission is deducted from the money you send to the fund. A figure with an r is the maximum redemption fee charged when you sell shares. Funds that charge both sales and redemption fees have been footnoted with an s by the front-end load.
Represents the percentage of a fund’s assets taken out annually to cover management fees and other expenses. Expenses are included in total-return numbers.
Compare funds with others that employ similar styles.
Funds with decile ranks that are consistently between 1 and 4 tend to produce superior long-term returns.
If a fund manager came on board recently, the fund’s long-term results may not be meaningful.
Investing in a high-risk fund isn’t necessarily bad. What’s important is that you be aware of and accept a fund’s risk.
Focus on sales charges and expenses. They are predictable, while performance is not.