Here is some really good news for you. The Skilled Investor has published an article about lower cost S&P 500 index mutual funds that you can read, entitled: Low Cost S&P 500 Index Mutual Funds. 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.
Below you will also find our Fund Authority Score summary for Vantagepoint 500 Stock Index II mutual fund. From a lower cost standpoint, these VPSKX index mutual fund shares are on the list as one of these better choices among all S&P500 index mutual funds.
The diversified investment fund strategy of the Vantagepoint 500 Stock Index mutual fund
According to Vantagepoint’s prospectus, the investment strategy of the Vantagepoint 500 Stock Index mutual fund “to offer long-term capital growth by approximating the performance of the S&P 500 Index. The fund’s principal investment strategies are “to seek to invest, under normal circumstances, at least 90% of its net assets in a portfolio that consists of the stocks in the S&P 500 Index, weighted to seek to replicate the investment characteristics and performance of the index.”
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.
The Vantagepoint 500 Stock Index II is not for the individual investor with limited funds. To participate in this low cost mutual fund, you must be eligible to participate in an employer-sponsored retirement savings plan that offers VPSKX Class II Shares as an investment alternative. Such employer plans might include A) 457 deferred compensation plans, B) 401(a) defined contribution plans, C) 401(k) salary reduction plans, or other similar plans.
To obtain the .25% annual expense ratio associated with Class II Shares, your employer-sponsored plan must have $20 million or more of your group’s employee assets under administration by the Vantagepoint Funds sponsor. If you plan’s total assets under administration by the sponsor are under $20 million, then only Class I Shares would be available, which carry a higher annual expense ratio of .45%. The trading symbol or ticker symbol for Class I Shares is VPFIX. Note that this higher annual expense ratio would have caused the VPSKX +9 Fund Authority Score to drop to a +8 Fund Authority Score for VPFIX Class I shares.
Individuals can also invest directly with Vantagepoint Funds in a traditional IRA account or a Roth IRA account. However, only Class I Shares (VPFIX) are available, which carry the .45% annual management fee. While Class II Shares carry a relatively low expense ratio for an index fund tracking the S and P 500 composite index, the higher VPFIX Class I Shares expense ratio might induce a direct IRA investor to look elsewhere for a lower cost passively managed index investment fund. To learn more about excessive investment fees, read: “Excessive investment costs are a huge problem for individual investors.”
The Fund Authority Score for the Vantagepoint 500 Stock Index mutual fund — Class II Shares
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 Vantagepoint 500 Stock Index mutual fund Class II Shares (VPSKX)
|Fund Authority Summary||Vantagepoint 500 Stock Index II||Fund Authority Score|
|FUND AUTHORITY SCORE (scale of -10 to +10)||9|
|FUND AUTHORITY SCORING COMPONENTS|
|A) Management expenses & sales loads (-4 to +4)|
|-- Annual expense ratio with 12b-1 fees||0.25%|
|-- Front-end sales load with 5 year amortization||0.00%|
|----- Total annual direct costs||0.25%||4|
|B) Fund portfolio transactions costs (-3 to +3)|
|-- Annual turnover as a trading cost proxy||4.0%||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||7||1|
|D) Is this fund sufficiently mature? (0 or +1)||1|
|E) Very small fund efficiency penalty (-1 or 0)||0|
|INVESTMENT FUND OVERVIEW|
|-- Type of investment fund||index mutual fund|
|-- Active versus passive management||passively managed fund|
|-- Total net assets||$413 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||1999|
|-- Trading symbol||VPSKX|
|-- Share class evaluated||Class II Shares|
|-- Front end load charge (percentage)||0.00%|
|-- Minimum initial deposit for individual investor||$0 (in employer-sponsored retirement plan account)|
|TOP 10 INVESTMENT SECURITIES HOLDINGS||ExxonMobil Corporation (XOM)|
|General Electric Company (GE)|
|Microsoft Corporation (MSFT)|
|AT&T Inc. (T)|
|Procter & Gamble Company (PG)|
|Bank of America Corporation (BAC)|
|Citigroup Inc. (C)|
|Cisco Systems Inc. (CSCO)|
|Chevron Corporation (CVX)|
|Johnson & Johnson (JNJ)|
|----- Top 10 Investment Portfolio Holdings (%)||19.55%|
|Fund family website||www.icmarc.org|
|Customer service telephone number||800-669-7400|
|SEC EDGAR filings and/or fund website accessed||30 December 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: theskilledinvestor.com