MEDFX - MFS Emerging Markets Debt R3

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MFS Emerging Markets Debt R3 (MEDFX)
Expense Ratio: 1.13%
Expected Lifetime Fees: $33,198.95

The MFS Emerging Markets Debt R3 fund (MEDFX) is a Emerging Markets Bond fund started on 12/1/2008 and has $4.90 billion in assets under management. The current manager has been running MFS Emerging Markets Debt R3 since 8/16/1998. The fund is rated by Morningstar. In addition to trading fees and broker commissions, this fund has 12b-1 fees of 0.25%

MarketRiders Prefers The Following ETF

iShares JPMorgan USD Emerg Markets Bond (EMB)
Expense Ratio: 0.60%
Expected Lifetime Fees: $18,626.92

The iShares JPMorgan USD Emerg Markets Bond (EMB) is an Exchange Traded Fund. It is a "basket" of securities that index the Emerging Markets Bond investment strategy and is an alternative to a Emerging Markets Bond mutual fund. Fees are very low compared to a comparable mutual fund like MFS Emerging Markets Debt R3 because computers automatically manage the stocks.

The Following Emerging Markets Bond Funds Have Lower Fees Than MFS Emerging Markets Debt R3 (MEDFX). Why are these metrics important?
Mutual Fund Name Ticker Symbol Turnover Assets (M) Annual Fees
Columbia Emerging Markets Bond Fund Class R4 CMKRX 24.0% 529 1.00%
Columbia Emerging Markets Bond Z CMBZX 24.0% 529 1.01%
DoubleLine Emerging Markets Fixed Income Fund Class I DBLEX 177.0% 409 0.96%
Dreyfus Emerg Market Debt Local Curr I DDBIX 98.0% 2,900 0.97%
DWS Enhanced Emerg Mkts Fixed Inc S SCEMX 134.0% 232 0.98%
DWS Enhanced Emerg Mkts Fixed Inc S SEL1Z 134.0% 232 0.98%
Eaton Vance Emerging Markets Local Inc I EEIIX 16.0% 565 1.04%
Fidelity Advisor Emerging Markets Inc I FMKIX 133.0% 1,400 0.90%
Fidelity New Markets Income FNMIX 132.0% 5,200 0.87%
Franklin Templeton Emerg Mkt Debt Opp FEMDX 29.1% 443 1.02%
Goldman Sachs Emerging Market Debt I GSDIX 86.0% 1,300 0.88%
Goldman Sachs Local Emerg Mkts Debt Inst GIMDX 183.0% 1,700 0.91%
JPMorgan Emerging Mkts Debt Sel JEMDX 124.0% 721 1.01%
Lazard Emerging Markets Debt Portfolio Institutional Shares LEDIX 108.0% 181 1.00%
MainStay Global High Income I MGHIX 65.0% 318 0.97%
MFS Emerging Markets Debt I MEDIX 80.0% 4,900 0.88%
MFS Emerging Markets Debt R4 MEDGX 80.0% 4,900 0.88%
Payden Emerging Markets Bond PYE1Z 85.0% 824 0.85%
Payden Emerging Markets Bond PYEMX 85.0% 824 0.85%
Payden Emerging Markets Bond Adviser PYEWX 85.0% 824 1.10%
PIMCO Emerging Local Bond Instl PELBX 22.0% 12,000 0.90%
PIMCO Emerging Local Bond P PELPX 22.0% 12,000 1.00%
PIMCO Emerging Markets Bond Admin PEBAX 12.0% 6,500 1.08%
PIMCO Emerging Markets Bond Instl PEBIX 12.0% 6,500 0.83%
PIMCO Emerging Markets Bond P PEMPX 12.0% 6,500 0.93%
Stone Harbor Emerging Mkts Debt Instl SHMDX 82.0% 1,100 0.76%
Stone Harbor Local Markets Institutional SHLMX 102.0% 1,500 1.02%
T. Rowe Price Emerging Markets Bond PREMX 50.1% 3,300 0.94%
T. Rowe Price Instl Emerging Mkts Bond TREBX 49.9% 233 0.70%
TCW Emerging Markets Income I TGEIX 137.9% 3,800 0.87%
TCW Emerging Markets Local Currency Income Fund Class I TGWIX 191.7% 177 0.99%
TCW Emerging Markets Local Currency Income Fund Class N TGWNX 191.7% 177 0.99%
Western Asset Emerging Markets Debt I SEMDX 16.0% 399 0.95%

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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.