MEDIX - MFS Emerging Markets Debt I

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MFS Emerging Markets Debt I (MEDIX)
Expense Ratio: 0.88%
Expected Lifetime Fees: $26,533.40

The MFS Emerging Markets Debt I fund (MEDIX) is a Emerging Markets Bond fund started on 03/17/1998 and has $4.90 billion in assets under management. The current manager has been running MFS Emerging Markets Debt I since 08/16/1998. The fund is rated by Morningstar. This fund does not charge 12b-1 fees.

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 I because computers automatically manage the stocks.

The Following Emerging Markets Bond Funds Have Lower Fees Than MFS Emerging Markets Debt I (MEDIX). Why are these metrics important?
Mutual Fund Name Ticker Symbol Turnover Assets (M) Annual Fees
Fidelity New Markets Income FNMIX 132.0% 5,200 0.87%
Payden Emerging Markets Bond PYE1Z 85.0% 824 0.85%
Payden Emerging Markets Bond PYEMX 85.0% 824 0.85%
PIMCO Emerging Markets Bond Instl PEBIX 12.0% 6,500 0.83%
Stone Harbor Emerging Mkts Debt Instl SHMDX 82.0% 1,100 0.76%
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%

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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.