My favorite mutual fund fee calculator

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I first came across the Personalfund.com mutual fund fee calculator in 2001. And what a time to come across such a powerful tool. Back then many equity mutual funds were coming off a decade of unprecedented returns.

Equity mutual funds were fat with fees and weighed down by embedded capital gains; finding an efficient fund was no simple task. For that reason, having the mutual fund fee calculator, to illuminate the way, was a Godsent. (btw, I like to call that time in the market’s history the Java the Hutt period, symbolizing the gorged nature of many a stock or fund.)

Most people, back then, were giddy with their overall investment performance and could care less about the internal costs associated with mutual fund ownership. That slowly began to change, as the market took a turn for the worse in the early 2000’s.

A blast from the past

A former colleague asked me to take a look at this new calculator he had come across, so I went to the website, opened it up and inputed my first fund symbol. From that moment on I was hooked.

I can still remember sitting at my desk, at Merrill Lynch, and being shocked by the fees this cost calculator was showing me. Seeing a mutual fund with internal costs in the neighborhood of 10%. Was that right? Sure was. In fact, it was not that unusual back then. Incredible!

I played with the calculator for hours and days, getting to know all the different nuances, understanding the different assumptions used; this little tool became an integral part of my business back then. It helped open my eyes to what really happens behind the curtain.

Validation

One of the reasons I was so excited was because this calculator helped to validate what I had been thinking for a while. I was concerned about the internal costs surrounding many mutual funds and was looking for a more efficient way to build client portfolios.

So you can bet I used this tool to make many a client aware of the ‘true’ internal costs surrounding mutual fund ownership. (Of course, always being careful to disclose the assumptions that the fund calculator was using to arrive at those numbers; much like I do when going through the assumptions used in financial planning software today)

Mutual Fund transparency- finally

This is one of the few cost calculators that walks the walk and talks the talk. It breaks down, line by line, the fees associated with any mutual fund. One of the most unique aspects of the calculator is that it itemizes the cost of the hidden fund fees only found in the SAI.

I have not seen this feature anywhere else. This is the one thing that really differentiates it from anything else out there. There is nothing left to the imagination, ALL the true costs are right there in front of you for stark examination.

Just take a look at some of the testimonials on the PersonalFund homepage. Forbes magazine calls it, “the best fund expense calculator on the web.”

In Conclusion

The moral of the story: Learn to identify mutual funds that are efficient, low cost performers. Don’t worry about fund performance, leave that in the hands of the the fund management team. The only thing you can control is your selection of a fund that has reasonable fees.

Like I said in Saturday’s post, it’s nearly impossible to predict future fund performance, on the other hand, fund costs are far more predictable and controllable. It’s the least you can do for yourself…

A good way to find all of this information (and more) is using the PersonalFund cost calculator.

NOTE: In my next post, I will analyze the results of a randomly selected mutual fund using the mutual fund cost calculator.

Tags: Mutual Fund Cost Calculators, Mutual Funds