No Load Mutual Funds Vanguard
May 11, 2008
If a no load mutual fund and a load mutual fund have the same annual return with the same fee schedule, than the no load mutual fund will out perform. Think of it this way some load funds charge a 3% to 6% commission up front. So if you invest $10,000 in a front end mutual fund then you will only actually be investing $9,400 if you are charged the 6% commission. You are already starting off with a loss. This issue doesn’t happen with the no load mutual funds vanguard has.
Now a lot of times no load funds like the ones vanguard has outperform but sometimes a load fund can be worth it. How can this be? Well if the load fund has good returns every year it can make up for the disadvantage of charging you a commission. If a load mutual fund returns 20% each year and a no load fund such as Vanguards only returns 10% a year you will be better in the long run with the load. But most often then not no load funds which Vanguard has will out perform load ones.
Best Vanguard Mutual Funds
February 5, 2008
One way to get the highest return on your investment is to find the best mutual funds that also have the lowest fees. All mutual funds charge you a small fee for their service of professionally managing your money and also to deal with all the administration fees. This fee can really eat into your profit each year. Think about it this way, if a mutual fund is charging you a 1% managing fee per year; and the fund returns 10% on the year, you only got a 9% return. Now that doesn’t seem like a big deal but that small percentage is hitting you every year; even when the fund goes down. If you can find the best mutual funds that also have the lowest fees you will have a good chance at out performing the markets most year.
Vanguard is a great company that is known for having some of the lowest fees in the industry. Combined with their proven track record, you have a winning combination. Liper did a study and found that on average Vanguard’s fees are just one fourth the cost of other mutual funds. That is a big savings, especially when your savings are compounded every year. If you could get the same or better return and pay a lower fee for it, then you better be going with the mutual fund company that charges the least.
A lot of times low cost is associated with bad quality or bad service. This is not the case with Vanguard mutual funds. Vanguard has been around since the mid 1970s and is now managing over $800 billion in assets. If they didn’t provide quality service and good returns they wouldn’t have been around so long and manage such a large amount of money.
Vanguard is a big name in the mutual fund industry and we will discuss more about them and all their different types of funds in future posts. The main point to take away from this post is that mutual fund fees can really hurt your return. Your goal is to find the best mutual funds that also have very low fees.
