How to Find Value in No Load Mutual Fund Investing

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 expectations.

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 don't.

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.

About The Author

Ulli Niemann is an investment advisor and has been writing about objective, methodical approaches to investing for over 10 years. He eluded the bear market of 2000 and has helped countless of people make better investment decisions. To find out more about his approach and his FREE Newsletter, please visit: www.successful-investment.com; [email protected]

In The News:

Mutual Fund update: AMCs not banking on bank stocks  Dalal Street Investment Journal

Time Out

Are you paying any attention to your retirement savings? Do... Read More

Picking Mutual Funds to Outperform the Market

With over 6,000 mutual funds available, it may be tempting... Read More

Dont Buy Stocks based on P/E Ratio alone

I use the P/E ratio as a secondary indicator for... Read More

The Golden Goose is Sick

It is finally catching up with them. The brokerage companies... Read More

Trend Trading - Trading Stocks Using Technical Analysis and Swing Trading Strategies

Peter is a professional trader, Paul is not. Peter has... Read More

Buying Mutual Funds

It looks like the market is ready to start up... Read More

Hedge Funds

You read and hear a lot about hedge funds. Unfortunately,... Read More

Mutual Funds are Dead

You may have wondered why your mutual funds have been... Read More

Swing Trading Strategies

Using Swing Trading Strategies and Technical Analysis when Trading Stocks... Read More

Oil Stocks CHK WLL - What Is Their Worth?

(1) CHK stock price $16.74, NAV $32.5CHK is my favorite... Read More

The Cub; II

We keep hearing about this bear market and that the... Read More

A Common Misconception about Stock Prices

I cringe every time I hear a novice investor tell... Read More

Stock Chart Reading

As an investor you will want to check out any... Read More

The Stock Trading Plan - Why You Must Have One To Trade Successfully

This is the continuing story of our two imaginary traders,... Read More

Stuff

I continually hear from economists, talking heads, other market letter... Read More

Take The Time

You must take the time once a month to review... Read More

Stock Market Investing: Knowing When (and when not) to Sell

One of the greatest challenges of investing in stocks is... Read More

Look Out The Window

Quick, look out the window. It's raining. No, the sun's... Read More

How to Pick Winning Stocks

There is nothing more exciting than finding an undervalued stock... Read More

Struggling Stocks, Booming Commodities

04/28/2005NASDAQ dropped -12.5% year to date in 2005. S&P500 index... Read More

Oil Stocks As A Long Term Investment

The demand for world oil is increasing while world reserves... Read More

How to Short Stocks? How to Make Money when Your Stocks Go Down by Shorting

The stock market can present you with a lot of... Read More

The Elephant

Four blind men were asked to give a description of... Read More

Expense Ratios

Mutual funds and brokers are always preaching not to buy... Read More

Enron Cure

Let's hope you did not have any of the Enron... Read More