The Standard & Poors 500 stock index is the most common equity index fund benchmark in the U.S. The S and P 500 tracks about 75% of publicly traded U.S. equity market asset value. The dominant issue in choosing among passively managed index mutual funds and ETF funds benchmarked against the S & P 500 is that securities industry management and trading fees are all over the map from reasonably low to shockingly high. If you are naive enough to pay higher expense ratios for what are just commodity S&P 500 index funds, then the high investment fees that you pay are just a wealth transfer from you to the financial industry that repeatedly bleeds your personal investment portfolio.
Here is some good news for you. The Skilled Investor has published an article about lower cost S&P 500 index mutual funds that you can read, which is entitled: Low Cost S&P 500 Index Mutual Funds. Below you will also find our Fund Authority Score summary for the California Investment S and P 500 Index mutual fund, which is one of the best index funds for a lower cost standpoint.
The California Investment S&P 500 Index Direct received a very respectable +8 Fund Authority Score. The two points below the maximum possible are due to the fund’s .36% in total expenses and the size of the fund. At just over $100 Million in assets, the fund is small enough to be challenged by operating efficiency. This index mutual fund’s .36% expense ratio is subsidized with a waiver and would have been .17% higher without reimbursement by the fund manager. Check to see whether the fund intends to continue to waive some of its stated fees.
Note also that you can obtain shares directly from the California Investment Trust with an opening balance as low as $1,000.
The diversified investment fund strategy of the California Investment S&P 500 Index Direct
According to California Investment Trust’s website, the investment strategy of the California Investment S&P 500 Index mutual fund is to seek “investment results that correspond to the total return of large sized publicly traded companies as represented by the Standard & Poor’s 500 Composite Stock Index.”
The Fund Authority Score for the California Investment S&P 500 Index mutual fund
The table below presents the Fund Authority Score and other information for the California Investment S&P 500 Index mutual fund.
Fund Authority Scores rate mutual funds and exchange traded funds (ETFs) on the most important economic factors that influence individual investors’ net long term diversified investment fund performance. The Skilled Investor developed the Fund Authority Score system to provide individual investors with concise and objective summaries of mutual funds and ETFs for comparisons within investment asset classes.
Using an integer scale ranging from -10 to +10, Fund Authority Scores measure five factors:
1) annualized management and investment sales expenses (40% weighting),
2) annual trading costs implied by investment fund portfolio turnover (30% weighting),
3) inferior and superior historical performance (20% weighting),
4) minimum fund maturity (5% weighting), and
5) minimum fund size for operating efficiency (5% weighting).
Fund Authority Summary for the California Investment S&P 500 Index mutual fund (SPFIX)
|Fund Authority Summary||California Investment S&P 500 Index Direct||Fund Authority Score|
|FUND AUTHORITY SCORE (scale of -10 to +10)||8|
|FUND AUTHORITY SCORING COMPONENTS|
|A) Management expenses & sales loads (-4 to +4)|
|-- Annual expense ratio with 12b-1 fees||0.36%|
|-- Front-end sales load with 5 year amortization||0.00%|
|----- Total annual direct costs||0.36%||3|
|B) Fund portfolio transactions costs (-3 to +3)|
|-- Annual turnover as a trading cost proxy||3.6%||3|
|C) Penalize very inferior historical performance and credit average and superior historical performance (-2 to +2)|
|-- Total of the 3 year Morningstar + Lipper ratings||8||2|
|D) Is this fund sufficiently mature? (0 or +1)||1|
|E) Very small fund efficiency penalty (-1 or 0)||-1|
|INVESTMENT FUND OVERVIEW|
|-- Type of investment fund||index mutual fund|
|-- Active versus passive management||passive index fund|
|-- Total net assets||$107.3 Million|
|-- Type of investment portfolio securities||stocks - equities|
|-- Geographic focus||United States|
|-- Market capitalization of portfolio securities||large|
|-- Strategy skew (value/growth/neither)||neither|
|-- Target performance benchmark index||Standard and Poors 500 Index|
|-- Year of inception||1992|
|-- Trading symbol||SPFIX|
|-- Share class evaluated||Direct Shares|
|-- Minimum initial deposit for individual investor||$1000|
|TOP 10 INVESTMENT SECURITIES HOLDINGS||ExxonMobil Corporation|
|General Electric Company|
|Bank of America Corporation|
|Procter & Gamble Company|
|American International Group|
|----- Top 10 Investment Portfolio Holdings (%)||19.30%|
|Fund family website||www.caltrust.com|
|Customer service telephone number||800-225-8778|
|SEC EDGAR filings and/or fund website accessed||21 November 2007|
– Most mutual funds and ETFs change their fees and trading strategies relatively little over time. Because investment expenses, trading/turnover costs, fund maturity, and operating efficiency account for 80% of the Fund Authority Score rating system, Fund Authority Scores tend to remain relatively stable over time for such consistent investment funds.
– The date in the table above indicates when fund information was accessed from SEC EDGAR filings and/or the fund company website. Normally, data used to develop Fund Authority Scores rely upon reporting periods ending the previous calendar quarter or half year.
– Unless otherwise stated, there are no business arrangements of any kind between The Skilled Investor and any financial product, service, or company that may be discussed in our publication’s articles.
– Fund Authority Scores are developed on a fund by fund basis. Just because a mutual fund or ETF has a high Fund Authority Score does not mean that other funds from that fund family do, as well. On your own, always be careful to check current management expenses, sales loads, portfolio turnover, fund maturity, fund size, fund performance, and other current factors before investing in any diversified investment fund.
– If you do not need and/or are unwilling to pay the direct and indirect costs of an investment counselor, stock broker, or other financial advisory intermediary, you should note that many mutual funds can be purchased directly from diversified investment fund families by accessing their websites or by calling their customer service telephone numbers. Similarly many ETFs can be purchased with lower transactions fees through discount brokers. (See these articles: Payment of Investment Advisors, Financial Planners, and Investment Counselors)
– Your decision on whether to purchase or to sell any investment security is yours and yours alone. This TSI Site is a financial publication and is solely for informational and educational purposes related to your personal, private, and non-commercial use. Our articles report on publicly available documents and research studies. We have not verified any of the information reported in the information provided, and there could be errors with this information. It is solely your responsibility to verify any and all information before investing or purchasing any financial product or service. In no way does this site constitute a solicitation or offer to sell securities or investment advisory services.Tags: diversified investment