FINRA’s free Fund Analyzer tool (tinyurl.com/3r2s9ykw), is worth a try if you invest in mutual funds. FINRA, the Financial Industry Regulatory Authority, is the government-authorized regulator of the financial services industry.
This tool’s database is sourced from Morningstar, a leading provider of independent investment research, and Broker Village, an analytics and consulting firm. FINRA took the extra step of having Broker Village audit the tool to “confirm, refine, and verify the calculation methodologies for accuracy and completeness” (tinyurl.com/yuccnwcu), which will give you comfort in knowing FINRA sees this as a significant tool for both professionals and individual investors.
Normally, I would start with reading “Using the FINRA Fund Analyzer” (tinyurl.com/28vtbfzc), but because this tool is so robust, you may get sidetracked if you begin there. Instead, I suggest diving in by clicking the button called “Use the Fund Analyzer.”
Let’s jump in. I’ll use Washington Mutual, an American Funds offering, as an example.
When searching for Washington Mutual, the tool produces a list of 21 share classes with names and symbols, along with a column that shows annual expense ratios. The expense ratios range from a high of 1.33% for Class C shares (529 Class C’s are higher at 1.39%) to a low of 0.27% for Class F3 shares (and Class R-6 shares). The report tells me that the Class C shares also have a “back load,” which is a sales charge that applies when you “redeem” (sell) fund shares. The sales charge is typically reduced over time.
I choose Class F3 (using the plus sign) to compare to the Class C shares. F3 is the share class I would choose for myself or for my clients. By clicking the Analyze button, I can compare the two.
Click on Advanced Options. You’ll see a list with Future Contributions, Annual Withdrawals and Existing Assets at the top. For now, just choose “no” to the question posed at the top of each screen. For example, choose “no” to whether you want to make future contributions; “no” to whether you want to make annual withdrawals; and leave existing assets blank.
Now click Analyze, which will allow you to compare share class returns for different periods. For example, five-year returns for Washington Mutual F3 shares were 10.82%, compared with 9.65% for C shares.
You can also screen for funds by using the filters on the left of the opening screen of the program. You’ll see product types (you can choose a mutual fund, ETF/ETN or money market fund), share classes, prospectus objectives, minimum purchases and annual operating expenses, along with Morningstar style boxes, ratings and categories.
I did a quick screen filtering for two fields: mutual fund and municipal bond (national) in Prospectus Objective, finding 825 funds that met those characteristics. Then, I screened for annual operating expenses of less than 0.5%, which narrowed the list to 284 funds. Next, I added institutional share classes, which brought down the list to 152 funds. I narrowed the list further to Muni national short in Morningstar Categories, giving me 58 funds. At that point, I could tag my “favorite funds” to compare to each other.
Give the tool a try, whether you are a do-it-yourselfer or a customer of a financial adviser. Regulators are always alert to mutual fund share class violations. This tool can help you spot issues on your own.
On a different note, this is a last call for entries to the 401(k) Champion essay contest. The application at 401kchampion.com takes about 15 minutes, costs nothing and can earn you and two others the title of 401(k) Champion plus a check for $1,000. I sponsor and fund the contest to promote financial literacy education among 401(k) participants. There is no requirement that applicants provide financial information. The applications are judged anonymously. The deadline is Thursday, Dec. 14, 2023.
Seasoned investment counsel (tinyurl.com/52nus8hz) and award-winning columnist and author, Julie Jason, JD, LLM, promotes financial literacy and investor protection. Read her latest book, “The Discerning Investor: Personal Portfolio Management in Retirement for Lawyers (and Their Clients)” (tinyurl.com/4u7h9pjs), published by the American Bar Association. Write to Julie at [email protected]. While all questions cannot be answered, each email is read and reviewed and can lead to discussion in a future column.
