Fund screening tools help you find funds that meet your objectives, whether you want a fund with a low expense ratio, a minimum initial investment that you can afford, one in your brokerage’s family of funds, the asset class your portfolio is missing or all the above. (BetterInvesting’s online Mutual Fund Tools at the website include a fund screening tool as well; see the image to the right. Members with the Membership Package have access to it.) Exploring on Index Universe
The Advanced Power Search that Index Universe offers has check boxes galore, although it may not have all the choices you want. Here’s what it has to offer:
Your first choice is the type of fund you’re looking for. You can choose to search ETFs, mutual funds or index mutual funds.
Next up: asset classes. If you want to find a fund that covers a portion of the market, click the plus sign to the left of the label “Click here to select the Asset Class(es).” Index Universe offers 46 asset class choices. Initially, the screener turns on the All check box. If you want to narrow the field, turn on all the check boxes you want to search for. For example, you can turn on the Large Cap Value, Mid Cap Value and Small Cap Value check boxes to find all the value funds available. If you’re on the prowl for mid-cap funds, simply turn on the Mid Cap check box, which looks for both growth and value funds.
The second section of the screener jumps ahead to the information you want to see in the results. Click the plus sign to the left of the label “Click here to select the Data Points.” The data available depends on the type of fund you’re seeking. For example, you can ask for the expense ratio if you screen for funds but not when you screen for index funds or ETFs.
The screener automatically turns on no-brainer fields such as Name, Ticker, P/E Ratio and the most recent annual returns — 2009 at this point. But it also turns on check boxes for data you likely don’t want, such as 1 Month Returns and Year-to-Date Returns. To see the returns for the past 10 years, turn on the check boxes for 2001 Annual Returns through 2009 Annual Returns. The screener delivers other information: three-year and five-year annualized returns so that you can see compound growth, the number of holdings, the Sharpe Ratio — a measure of return for the risk assumed — and the price-to-book ratio.
The third plus sign (“Click here to screen by”) is where you choose the values you screen by. Index Universe lets you screen by expense ratio, returns from one-month to five-year annualized as well as returns for a specific year, the price-earnings ratio and the P/B ratio (price-to-book value). Remember, you can search for specific thresholds for returns, but the bottom line for funds is whether they beat market indexes during a period — or in the case of index funds, track the corresponding index — which is information Index Universe doesn’t offer.
Other absent screening fields include manager tenure, turnover and minimum investment. If you’re searching for an index, manager tenure isn’t that important. But for actively managed funds, you want to know that the manager in charge is the one who has delivered the performance you’re basing decisions on. If you want a fund that keeps fees and taxes low, look for funds with low turnover. Of course, if you have a limited amount of money to invest, you want to find a fund whose minimum investment is within your reach.Checking Out Morningstar and Yahoo! Finance
Screening for funds doesn’t guarantee that you’ll find what you’re looking for. Search for a small-cap stock fund with a low expense ratio and you’re likely to get zip. If a fund screen doesn’t find any matches, loosen up the criterion you care about least — the number of holdings, for example. Morningstar’s Fund Screener, on the other hand, is designed with mutual funds in mind. For example, it includes manager tenure and fields for costs, such as minimum initial purchase, loads and expense ratio. The “Fund group” box lets you choose from broad asset classes such as Domestic Stock. The “Fund category” includes choices such as Large Growth, but you can’t select multiple asset classes the way you can at Index Universe.
When you search for stock funds, you can specify a cutoff for turnover. Yahoo! Finance’s tool lets you screen by fund family, perfect if you have an account with a big fund company such as Vanguard or T. Rowe Price.Link of the Month
Bob Adams, a volunteer with BetterInvesting’s Puget Sound (Wash.) Chapter, has developed a spreadsheet to help evaluate whether fund costs and returns are reasonable. Most actively managed mutual funds underperform the market while costing you, on average, more than 4 percent a year in fees, commissions and taxes.
For example, the average expense ratio for a no-load fund is 1.5 percent with a 0.25 percent 12b-1 fee, an additional 1 percent in commissions and finally, capital gains taxes of 1.4 percent caused by turnover.
The spreadsheet downloads data from Yahoo! Finance, so you don’t have to enter any values other than the two fund ticker symbols.
• The Fees & Expenses section shows the expense ratio and other fees a fund charges and the resulting one-year and five-year expense projections. The spreadsheet’s sample actively managed fund has projected five-year expenses of $972 compared with five-year expenses of $101 for a Vanguard index fund that covers the same portion of the stock market.
• The Trailing Returns vs. Benchmarks section looks at performance compared with the relevant index and competitors in the same category.
• You can also see the load-adjusted returns — the return earned taking into account the sales load paid.
• The Performance Overview section shows best and worst years and includes a graph of annual performance for the past 10 years.
• The Period Ranking section shows how the fund ranked for the past one, three and five years. You can also see the minimum initial investment.
• The Management Information section shows the manager’s tenure and provides some information about the manager.
One spreadsheet page shows what you need to know to make an informed choice between two funds. You can face funds off two by two until you find a winner.Websites of Interest Index Universe screener Morningstar Fund Screener Yahoo! Finance Mutual Fund ScreenerBob Adams website
Bonnie Biafore is the author of 24 books about investing, personal
finance, project management, software (such as QuickBooks and Project)
and the recently published novel, Fresh Squeezed. Go to
BonnieBiafore.com to learn more.