BFMSX - BlackRock Low Duration Bd Instl

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BlackRock Low Duration Bd Instl (BFMSX)
Expense Ratio: 0.55%
Expected Lifetime Fees: $17,164.20

The BlackRock Low Duration Bd Instl fund (BFMSX) is a Short-Term Bond fund started on 7/17/1992 and has $2.20 billion in assets under management. The current manager has been running BlackRock Low Duration Bd Instl since 7/29/2008. The fund is rated by Morningstar. This fund does not charge 12b-1 fees.

MarketRiders Prefers The Following ETF

Vanguard Short-Term Bond ETF (BSV)
Expense Ratio: 0.11%
Expected Lifetime Fees: $3,595.26

The Vanguard Short-Term Bond ETF (BSV) is an Exchange Traded Fund. It is a "basket" of securities that index the Short-Term Bond investment strategy and is an alternative to a Short-Term Bond mutual fund. Fees are very low compared to a comparable mutual fund like BlackRock Low Duration Bd Instl because computers automatically manage the stocks.

The Following Short-Term Bond Funds Have Lower Fees Than BlackRock Low Duration Bd Instl (BFMSX). Why are these metrics important?
Mutual Fund Name Ticker Symbol Turnover Assets (M) Annual Fees
American Beacon Short-Term Bd Instl AASBX 65.0% 184 0.38%
American Century Short Duration Instl ACSUX 100.0% 415 0.41%
American Funds Interm Bd Fd of Amer F-2 IBAFX 80.0% 9,600 0.34%
American Funds Interm Bd Fd of Amer R5 RBOFX 80.0% 9,600 0.35%
American Funds Interm Bd Fd of Amer R6 RBOGX 80.0% 9,600 0.30%
American Funds ST Bd Fd of Amer F-2 SBFFX 44.0% 4,200 0.40%
American Funds ST Bd Fd of America R5 RAMFX 44.0% 4,200 0.41%
American Funds ST Bd Fd of America R6 RMMGX 44.0% 4,200 0.36%
Baird Short-Term Bond Inst BSBIX 61.1% 1,100 0.30%
Calvert Short Duration Income Fund Class I CDSIX 263.0% 2,100 0.49%
Columbia Short Term Bond Z NSTMX 76.0% 2,800 0.49%
DFA Short-Term Extended Quality Portfolio Institutional Class DFEQX 17.0% 1,700 0.22%
DWS Short Duration Instl PPILX 93.0% 2,000 0.54%
Federated Interm Govt/Corp Instl FGCIX 103.0% 364 0.32%
Federated Short-Term Income Instl FSTIX 30.0% 1,400 0.54%
Federated Short-Term Income Y FSTYX 30.0% 1,400 0.37%
Fidelity Advisor Short Fxd-Inc I FSXIX 204.0% 1,400 0.53%
Fidelity Short-Term Bond FSHBX 223.0% 8,800 0.45%
Fifth Third Short Term Bond Instl KNLMX 61.0% 165 0.47%
Frost Low Duration Bond Inst FILDX 56.0% 243 0.54%
Invesco Short Term Bond Institutional ISTBX 40.0% 575 0.41%
Invesco Short Term Bond Y STBYX 40.0% 575 0.41%
JPMorgan Limited Duration Bd Sel HLGFX 21.0% 406 0.49%
JPMorgan Short Duration Bond R6 JSDUX 40.0% 11,300 0.31%
Legg Mason WA Short-Term Bond I SBSYX 105.0% 523 0.51%
Lord Abbett Short Duration Income I LLDYX 113.5% 20,700 0.39%
Metropolitan West Low Duration Bond I MWLIX 60.0% 1,700 0.40%
Nuveen Short-Term Bond I FLTIX 58.0% 826 0.48%
Payden Low Duration Fund PYSBX 74.0% 620 0.53%
PIMCO Low Duration II Instl PLDTX 1.0% 852 0.50%
PIMCO Low Duration III Instl PLDIX 496.0% 237 0.50%
PIMCO Low Duration Instl PTLDX 437.0% 21,300 0.46%
Pioneer Short Term Income Y PSHYX 54.0% 202 0.54%
PNC Limited Maturity Bond I PMYIX 54.0% 345 0.50%
Principal Short-Term Income Inst PSHIX 43.6% 1,400 0.47%
Prudential Short-Term Corporate Bd Z PIFZX 77.0% 7,500 0.52%
RidgeWorth Short-Term Bond I SSBTX 86.0% 311 0.48%
Russell Short Duration Bond Y RSBYX 339.0% 1,100 0.53%
Schwab Short-Term Bond Market SWBDX 94.0% 377 0.29%
T. Rowe Price Short-Term Bond PRWBX 71.9% 6,800 0.54%
TIAA-CREF Short-Term Bond Inst TISIX 146.0% 845 0.30%
TIAA-CREF Short-Term Bond Retail TCTRX 146.0% 845 0.52%
Vanguard Short-Term Bond Index Inv VBISX 67.0% 24,700 0.22%
Vanguard Short-Term Bond Index Signal VBSSX 67.0% 24,700 0.11%
Vanguard Short-Term Investment-Grade Adm VFSUX 47.0% 39,400 0.11%
Vanguard Short-Term Investment-Grade Ins VFSIX 47.0% 39,400 0.07%
Vanguard Short-Term Investment-Grade Inv VFSTX 47.0% 39,400 0.20%
Wells Fargo Advantage Short-Term Bd I SSHIX 51.0% 652 0.49%

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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.