hello everyone!i have a rookie concern. well, here goes....my employer (a major automobile insurance company that is not publicly traded) has for years offered it's employees a small suite of mutual funds with very low expense ratios and very low initial/subsequent purchase requirements (currently $250/$50). the funds are only available to employees and family members.now my employer has decided to offer a separate suite of funds to the general public. these 10 or so funds have only been around for about 2 months (inception in december of 2000).among these new funds, there are a couple of international (foreign) funds that i have interest in with nav's around $9/share. i would normally jump at one of the funds, because it would be a perfect fit to my "portfolio in progress". here's the problem: the funds have 12b1 fees, front-end and back-end loads and a noticeable service fee, (actually one has the front-end load and the other has the back-end load). because i'm an employee, i think i can avoid the loads as i may qualify for a waiver. however, i still have a problem with the 12b1 fees and the overall expense ratio of 1.8% or so.the initial investment minimum is $250 and subsequent buys are a $50 minimum. i plan to hold the fund shares for years to come as i'm 30+ years from conventional retirement age (ok, i'm 33). after 7 years or so, i think the back-end load disappears on the one fund.just so you all know, my employer is state farm and the subject funds are SFFAX and SFFBX (additional info at statefarm.com). my questions/concerns:-do funds usually start out with such fees?-is it unrealistic for me to think that over 10 yrs or so that these funds will eventually drop these ugly fees and look more desireable like the "employee only" funds?-or, am i fooling myself and should i continue my search for an international fund to compliment my portfolio?as you can probably tell, i have a strong allegiance to my company and couldn't imagine that they would offer funds with loads and 12b1 fees for any substantial amount of time. i would appreciate any comments.thanks,a fool trying to become a Fool.
"-do funds usually start out with such fees?" Depends on the fund company."-is it unrealistic for me to think that over 10 yrsor so that these funds will eventually drop theseugly fees and look more desireable like the "employeeonly" funds?" Fund companies that start out with 12b1 fees are notorious for keeping them. The 12b1 fees are supposed to cover promotion of the fund, with the idea being that shareholders would profit from the resulting increase in fund size, which would allow the fund to reduce management expenses. But historically, when a fund is closed to new investors, the 12b1 fee stays! Many companies in fact use the 12b1 fees to pay the brokers who promote the funds. Thus after selling a load fund, the broker is also paid to get you to stay in it, and hopefully add to your investment. "-or, am i fooling myself and should i continue my search for an international fund to compliment my portfolio?" Vanguard, Janus, and T Rowe Price are good places to start looking. Nary a 12b1 fee in the lot. Janus has historically done very well but hit a rough spot in the road; they'll come back. Best wishes, Chris
chris,thanks for the comments. i'll include those fund companies in my search. at this point, i have only looked at the offering from my employer and UMBWX (nothing special about this fund....it just came up in my initial search).i've just started my search and have more ahead of me.once again, thanks and take care.
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