MYREX - MainStay Retirement 2010 R3

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MainStay Retirement 2010 R3 (MYREX)
Expense Ratio: 1.48%
Expected Lifetime Fees: $41,940.05

The MainStay Retirement 2010 R3 fund (MYREX) is a Target Date 2000-2010 fund started on 5/1/2008 and has $67.70 million in assets under management. The current manager has been running MainStay Retirement 2010 R3 since 7/19/2007. The fund is rated by Morningstar. In addition to trading fees and broker commissions, this fund has 12b-1 fees of 0.50%

MarketRiders Prefers The Following ETF

iShares S&P Target Date 2010 (TZD)
Expense Ratio: 0.11%
Expected Lifetime Fees: $3,595.26

The iShares S&P Target Date 2010 (TZD) is an Exchange Traded Fund. It is a "basket" of securities that index the Target Date 2000-2010 investment strategy and is an alternative to a Target Date 2000-2010 mutual fund. Fees are very low compared to a comparable mutual fund like MainStay Retirement 2010 R3 because computers automatically manage the stocks.

The Following Target Date 2000-2010 Funds Have Lower Fees Than MainStay Retirement 2010 R3 (MYREX). Why are these metrics important?
Mutual Fund Name Ticker Symbol Turnover Assets (M) Annual Fees
American Funds Trgt Date Ret 2010 A AAATX 19.0% 937 0.74%
American Funds Trgt Date Ret 2010 R2 RBATX 19.0% 937 1.43%
American Funds Trgt Date Ret 2010 R3 RCATX 19.0% 937 1.06%
American Funds Trgt Date Ret 2010 R4 RDATX 19.0% 937 0.73%
American Funds Trgt Date Ret 2010 R5 REATX 19.0% 937 0.43%
American Funds Trgt Date Ret 2010 R6 RFTTX 19.0% 937 0.38%
Fidelity Advisor Freedom 2005 A FFAVX 28.0% 264 0.81%
Fidelity Advisor Freedom 2005 I FFIVX 28.0% 264 0.56%
Fidelity Advisor Freedom 2010 A FACFX 25.0% 848 0.86%
Fidelity Advisor Freedom 2010 I FCIFX 25.0% 848 0.61%
JHancock2 Retirement Living 2010 A JLAAX 43.0% 415 1.31%
JHancock2 Retirement Living 2010 R3 JLAFX 43.0% 415 1.46%
JHancock2 Retirement Living 2010 R4 JLAGX 43.0% 415 1.06%
Principal LifeTime 2010 R5 PTAPX 16.4% 1,700 0.95%
T. Rowe Price Retirement 2005 TRRFX 17.5% 1,200 0.58%
T. Rowe Price Retirement 2005 Advisor PARGX 17.5% 1,200 0.83%
T. Rowe Price Retirement 2005 R RRTLX 17.5% 1,200 1.08%
T. Rowe Price Retirement 2010 TRRAX 19.0% 5,500 0.61%
T. Rowe Price Retirement 2010 Adv PARAX 19.0% 5,500 0.86%
T. Rowe Price Retirement 2010 R RRTAX 19.0% 5,500 1.11%
Vanguard Target Retirement 2010 Inv VTENX 27.0% 5,600 0.17%
Wells Fargo Advantage DJ Target 2010 A STNRX 43.0% 852 0.99%
Wells Fargo Advantage DJ Target 2010 Adm WFLGX 43.0% 852 0.83%
Wells Fargo Advantage DJ Target 2010 I WFOAX 43.0% 852 0.48%
Wells Fargo Advantage DJ Target 2010 Inv WFCTX 43.0% 852 0.89%

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Why Are These Metrics Important?

Turnover represents how much of a mutual fund's holdings are changed over the course of a year through buying and selling. Active mutual funds have an average turnover rate of about 85%, meaning that funds are turning over nearly all of their holdings every year. A high turnover means you could make lower returns because: 1) buying and selling stocks costs money through commissions and spreads and 2) the fund will distribute yearly capital gains which increases your taxes. Look for funds with turnover rates below 50%. For comparison, ETF turnover rates average around 10% or lower.

Generally, smaller funds do better than larger ones. The more assets in a mutual fund, the lower the chance that it will beat its index. Managers outperform an index by choosing stocks that are undervalued. In order to find these undervalued stocks, the manager has to know more than his competitors to develop an "edge." There are only a finite number of stocks a mutual fund manager can reasonably analyze and actively track to gain such a competitive edge. When the fund has more assets, the manager must analyze large companies because he needs to take larger positions. Large companies are more efficiently priced in the market and it becomes increasingly difficult to get an edge.