Total Annual Costs used to rate a fund’s expenses reflects the all-in cost of a minimum investment in each fund assuming a 3-yr holding period, the average holding period for mutual funds.
This rating reflects all expenses, loads, fees and transaction costs in a single value that is comparable across all funds.
Our goal is to give investors as accurate a measure as possible of the cost of investing in every fund to determine whether this cost of active management is worth paying.
The Fund Asset Allocation Rating informs investors of each fund’s level of allocation to cash (non-equities) as well as how that level compares to other equity mutual funds.
We assume investors in equity funds prefer those funds to be maximally invested in equities given that investors can much more cheaply invest in cash on their own. We do not believe that most investors want to pay the high fees associated with equity funds to invest in cash.
Here is a free copy of our report on DeVry (DV) for Ask Matt readers. This report provides details behind Matt’s analysis of DV in his recent article in USA Today.Read More
Mr. Bogle, an invaluable voice of reason for investors over many years, suggests that there is too much speculation in our equity markets.
His comments jibe entirely with my post, Rise of the Speculative Movement.
There are 25 financial sector ETFs. Per Figure 1, these 25 ETFs have drastically different stock holdings and, therefore, allocations. The lowest number of holdings is 24 while the highest is 496.
For starters, investors interested in the financial sector cannot expect many good investment options given that the sector gets my “dangerous” rating and ranks ninth out of the ten sectors that make up the economy. Details are in our sector roadmap report.
There are 36 “large cap value” ETFs. Per Figure 1, these 36 ETFs have drastically different stock holdings and, therefore, allocations. The lowest number of holdings is 30 while the highest is 1178.
How do investors pick the ETF that will deliver the best performance?
Having too many choices can be intimidating. And there are definitely lots of choices when it comes to ETFs. For example, in the equity market alone, there 30+ technology sector ETFs, or 35 ‘large cap value’ and 20 financial ETFs. A very healthy selection abounds for every category of ETF.
The problem is that these ETFs are not made the same even though they may be in the same category. There are major differences in methodologies between funds, which results in drastically different holdings even within a given sector. See Figure 1.
Similar to my prior interviews on SBUX, I found it easy to make the bear case for a stock that is as expensive as Starbucks (SBUX). As my regular readers know, when I say “expensive”, I back that up with details such as: to justify its $40 stock price (closing price from prior day), SBUX had to grow profits at 10% compounded annually for more than 25 years.Read More
In addition to my stock-brawl interview on Thursday (9/29/11), I have commented to the media on Starbucks (SBUX) many times. Below is a list (with links) to my past opinions/comments on SBUX.Read More
Most of my research and publishing tends to focus on companies manipulating accounting rules to make their reported earnings look better than the real economic cash flows of their business.
It is unfortunately rare that I find a company whose economic earnings are outpacing the reported accounting results and whose stock is cheap.
One such company is Lam Research (LRCX – very attractive rating). One of September’s most attractive stocks, LRCX offers investors hidden value.
Here is a free copy of our report on GE for Ask Matt readers. This report provides details behind Matt’s analysis of GE in his recent article in USA Today. Click here for our report: General Electric (GE) Neutral Risk/Reward Rating.Read More
MarketWatch’s Chuck Jaffe feature’s New Constructs mutual fund rating system, which has a “neutral” rating on the Magellan fund.
Our fund rating system is the same as our stock rating system, which has received many accolades for its predictive power.
It is only a matter of time before oil and gas stocks stop moving with the price of oil and start reflecting their underlying economics.
When this happens, Baker Hughes (BHI – “very dangerous” rating) will be among the stocks that fall the hardest.
I do not think so. The question, however, is not so much about what directors ignore. You cannot ignore something about which you are unaware.
The real issue is that most directors and investors are simply unaware of the many one-time items because they are buried deep in the annals of footnotes in annual reports or 10-K filings.
I take great pleasure in recommending investors buy Clorox (CLX) – an attractive-rated stock, not just because of its strong profitability and cheap valuation but also because of the unusually high quality and integrity of its financial reporting.Read More
Great interview this am with Dagan McDowell and Ashley Webster about my recent article: “The Fed’s Bazooka: Revealed As Final Policy Firepower in Jackson Hole”.Read More
No more Mr. Nice Guy. It is time for Mr. Bernanke to break out the big guns in Jackson Hole this Friday.Read More
Too much of the rhetoric surrounding S&P’s downgrade of US debt misses the largest and most important point made by S&P’s bold move: the U.S. financial situation is very bad and getting worse with no reconciliation in sight.
It is difficult to deny the poor credit quality of an entity that grossly overspends its revenues, has a mountain of debt (most of which matures within the next few years) and has taken no meaningful steps toward remedying the situation?
By quibbling over S&P’s procedures and calculations, the Treasury and White House reveal that they have no solid rationale for disagreeing with the downgrade.
The financial sector is one of four sectors to earn our “dangerous” rating and is the worst-ranked sector in the our 3Q11 Sector Roadmap report according to my methodology at New Constructs.Read More
Here is a free copy of our report on RIMM for readers of Ask Matt.
The valuation of RIMM’s stock implies the company’s after-tax cash flow (NOPAT) will permanently decline by nearly 75%.