DRGBX - Dreyfus US Treasury Long-Term

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Dreyfus US Treasury Long-Term (DRGBX)
Expense Ratio: 1.06%
Expected Lifetime Fees: $31,368.98

The Dreyfus US Treasury Long-Term fund (DRGBX) is a Long Government fund started on 3/27/1987 and has $92.60 million in assets under management. The current manager has been running Dreyfus US Treasury Long-Term since 5/21/2008. The fund is rated by Morningstar. This fund does not charge 12b-1 fees.

MarketRiders Prefers The Following ETF

iShares Barclays 20+ Year Treas Bond (TLT)
Expense Ratio: 0.15%
Expected Lifetime Fees: $4,881.99

The iShares Barclays 20+ Year Treas Bond (TLT) is an Exchange Traded Fund. It is a "basket" of securities that index the Long Government investment strategy and is an alternative to a Long Government mutual fund. Fees are very low compared to a comparable mutual fund like Dreyfus US Treasury Long-Term because computers automatically manage the stocks.

The Following Long Government Funds Have Lower Fees Than Dreyfus US Treasury Long-Term (DRGBX). Why are these metrics important?
Mutual Fund Name Ticker Symbol Turnover Assets (M) Annual Fees
American Century Zero Coupon 2015 Adv ACTTX 19.0% 338 0.81%
American Century Zero Coupon 2015 Inv BTFTX 19.0% 338 0.56%
American Century Zero Coupon 2020 Adv ACTEX 35.0% 360 0.81%
American Century Zero Coupon 2020 Inv BTTTX 35.0% 360 0.56%
American Century Zero Coupon 2025 Adv ACTVX 39.0% 252 0.81%
American Century Zero Coupon 2025 Inv BTTRX 39.0% 252 0.56%
Fidelity Spartan L/T Tr Bd Idx Fid Advt FLBAX 52.0% 402 0.10%
Fidelity Spartan L/T Tr Bd Idx Inv FLBIX 52.0% 402 0.20%
PIMCO Extended Duration Instl PEDIX 355.0% 399 0.50%
PIMCO Long-Term US Government A PFG1Z 426.0% 1,700 0.83%
PIMCO Long-Term US Government A PFGAX 426.0% 1,700 0.83%
PIMCO Long-Term US Government Admin PLGBX 426.0% 1,700 0.73%
PIMCO Long-Term US Government Instl PGOVX 426.0% 1,700 0.48%
PIMCO Long-Term US Government P PLTPX 426.0% 1,700 0.57%
Rydex Govt Long Bond 1.2x Strategy Inv RYGBX 2.0% 383 0.98%
T. Rowe Price US Treasury Long-Term PRULX 43.1% 511 0.55%
Vanguard Long-Term Treasury Admiral VUSUX 229.0% 3,800 0.10%
Vanguard Long-Term Treasury Inv VUSTX 229.0% 3,800 0.20%
Wasatch-Hoisington US Treasury WHOSX 44.0% 277 0.75%

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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.