Comments on: Load vs. No-Load Part 2

By: Walt

Walt — Wed, 04 Feb 2009 22:12:48 +0000

Update – I think Wellesley Income Fund is now smoking the Franklin Templeton Income Fund.

By: Insurance » Blog Archive » Load vs. No-Load Part 2—� AllFinancialMatters

Fri, 08 Feb 2008 22:23:49 +0000

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By: Daniel

Daniel — Fri, 10 Nov 2006 01:12:29 +0000

Thanks for running these numbers. Unfortunately, these two funds aren’t completely comparable. While both are listed as Conservative, the Franklin fund has more risk through it’s use of junk bonds (http://en.wikipedia.org/wiki/Junk_bonds):

“It may invest up to 100% of total assets in debt securities that are rated below investment-grade, but it is not currently expected that the fund invest more than 50% of assets in these securities.

It’s not necessarily a worse fund because of this choice, but returns will likely be higher, and lower, than the more conservative Vanguard fund:

“The fund invests approximately 60% to 65% of its assets in investment-grade corporate, U.S. Treasury, and government agency bonds, as well as mortgage-backed securities.”

In the long term, with good management, I’d expect the Franklin fund to show higher returns. If you’re looking for a conservative income fund, however, it likely won’t be as stable as the Vanguard fund.

Just trying to confuse the issue a bit.

-Daniel

By: Meaghan

Meaghan — Thu, 09 Nov 2006 23:40:10 +0000

One caveat to these results is that past performance, of course, is no guarantee of future performance. I don’t have the stats at the moment, but most actively managed mutual funds that do better than their peers over one decade do worse than their peers over the next decade. Of course it is possible to choose a fund that did better than Vanguard’s Wellington fund over the past 10 years and say you should have bought that fund instead; that’s only useful, though, if you have a time machine and can go back to 1996 to buy that fund.

What I think would be more interesting (not to mention useful) is to compare the 10, or 5, loaded balanced mutual funds which had the best 10-year track record in 1996- And then compare it ‘forward’ with a no-load, low-fee balanced fund like Wellington. I bet that the majority would have a worse return, after accounting for loads and expenses.

By: Jeremy

Jeremy — Thu, 09 Nov 2006 19:09:58 +0000

Wow thanks, that was a quick update. Very interesting results. I did not expect them to be that significantly different though, a bit of a shock.

When I get home tonight I may have to put together a spreadsheet like that so I can compare additional funds with data like this in the future.

Of course, past results are never an indication of future performance!