MUTUAL FUND ARTICLES BY ULLI G. NIEMANN
Articles for Free publication in your Newsletter or on your
How to Find Value in No Load Mutual Fund Investing
By Ulli G. Niemann
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
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
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.
© Ulli G. Niemann