Mutual Funds

Other Players in the Field

More funds to make your money last.

From Kiplinger's Personal Finance magazine, September 2008

Several other top players in the retirement-income market offer funds, each with its own spin.

Charles Schwab
Products: Three Monthly Income funds.
Underlying Investments: Schwab and Laudus stock and bond funds.
Goals: Moderate Payout (SWJRX): 3% to 4% annual payout, with highest growth potential. Enhanced Payout (SWKRX): 4% to 5% annually with moderate growth potential. Maximum Payout (SWLRX): 5% to 6% annually with lowest growth potential.
Expenses: 0.73% annually (Maximum Payout fund) to 0.88% annually (Moderate Payout fund). Expense ratios include fees of underlying funds. Schwab is waiving management fees beyond those of the underlying funds through February 2009.
Minimum Investment: $100
Term: Begun March 2008, they run indefinitely.
Bottom line: Similar to Vanguard products, but more expensive.

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DWS Investments
Product: LifeCompass Income (INCAX) fund
Underlying Investments: Stock index funds, zero-coupon bonds, short-term instruments.
Goal: To make regular, semiannual distributions that add up to an 8.25% yield based on the fund's initial $10 net asset value. A warranty from Merrill Lynch protects the distributions and insures that investors get at least $1.75 per share or the fund's NAV at the end of the fund's life, whichever is higher. However, if the fund has to use the warranty to make a distribution before 2017, the fund ends with a final payout.
Expenses: The warranty helps make this an expensive fund -- 1.87% annually.
Minimum Investment: $1,000.
Term: Begun December 2007, it expires in 2017, unless it has to tap the warranty to pay distributions before the fund expires.
Bottom line: Complicated and pricey.

Russell
Products: Three funds: 2017 Retirement Distribution (RRDAX), 2017 Accelerated Distribution (RADAX) and 2027 Extended Distribution (REIAX).
Underlying Investments: Stock, bond and real estate portfolios managed by a variety of top fund companies, including Marsico and Wellington.
Goals: To make annual distri-butions of 6% (Extended), 7% (Retirement) and 10% (Accelerated).
Expenses: Class A shares charge a 5.75% load, and annual expenses run 1.23% to 1.34% annually.
Minimum Investment: N/A
Term: Begun December 2007, the products expire in the year named, at which time they hope to return "a portion of the capital initially invested."
Bottom line: Cherry-picking top fund managers should make for good returns, but the funds are expensive. High sales fees make them inappropriate for do-it-yourself investors.

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