EKIZX - Wells Fargo Advantage Adj Rate Govt I

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Wells Fargo Advantage Adj Rate Govt I (EKIZX)
Expense Ratio: 0.49%
Expected Lifetime Fees: $15,388.11

The Wells Fargo Advantage Adj Rate Govt I fund (EKIZX) is a Ultrashort Bond fund started on 10/1/1991 and has $1.40 billion in assets under management. The current manager has been running Wells Fargo Advantage Adj Rate Govt I since 01/21/2011. The fund is rated by Morningstar. This fund does not charge 12b-1 fees.

MarketRiders Prefers The Following ETF

SPDR Barclays Capital 1-3 Month T-Bill (BIL)
Expense Ratio: 0.15%
Expected Lifetime Fees: $4,881.99

The SPDR Barclays Capital 1-3 Month T-Bill (BIL) is an Exchange Traded Fund. It is a "basket" of securities that index the Ultrashort Bond investment strategy and is an alternative to a Ultrashort Bond mutual fund. Fees are very low compared to a comparable mutual fund like Wells Fargo Advantage Adj Rate Govt I because computers automatically manage the stocks.

The Following Ultrashort Bond Funds Have Lower Fees Than Wells Fargo Advantage Adj Rate Govt I (EKIZX). Why are these metrics important?
Mutual Fund Name Ticker Symbol Turnover Assets (M) Annual Fees
DFA One-Year Fixed-Income I DFIHX 78.0% 7,500 0.17%
Federated Gov Ultrashort Duration Instl FGUSX 26.0% 843 0.25%
Federated Gov Ultrashort Duration InSvc FEUSX 26.0% 843 0.35%
Federated Ultrashort Bond Instl FULIX 38.0% 1,500 0.38%
Fidelity Ultra-Short Bond FUSFX 103.0% 319 0.45%
Goldman Sachs Enhanced Income Instl GEIIX 86.0% 506 0.29%
Goldman Sachs Ultra-Short Dur Gov I GSARX 178.0% 280 0.40%
Metropolitan West Ultra Short Bond I MWUIX 29.0% 112 0.36%
Northern Ultra-Short Fixed Income Fund NUSFX 46.0% 468 0.25%
PIA Short Term Securities Adv PIASX 11.0% 169 0.35%
PIMCO Short-Term Instl PTSHX 307.0% 10,900 0.45%
RidgeWorth Ultra-Short Bond I SISSX 97.0% 105 0.32%
RidgeWorth US Gov Sec Ultra-Short Bd I SIGVX 70.0% 2,100 0.33%
Wells Fargo Advantage Ultra S/T Inc I SADIX 60.0% 1,200 0.36%
William Blair Low Duration Inst WBLJX 43.0% 180 0.40%

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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.