OTFSZ - Oppenheimer Transition 2015 A

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Oppenheimer Transition 2015 A (OTFSZ)
Expense Ratio: 1.20%
Expected Lifetime Fees: $35,001.20

The Oppenheimer Transition 2015 A fund (OTFSZ) is a Target Date 2011-2015 fund started on 12/15/2006 and has $79.00 million in assets under management. The current manager has been running Oppenheimer Transition 2015 A since 3/5/2009. The fund is rated by Morningstar. In addition to trading fees and broker commissions, this fund has 12b-1 fees of 0.24%

MarketRiders Prefers The Following ETF

iShares S&P Target Date 2015 (TZE)
Expense Ratio: 0.11%
Expected Lifetime Fees: $3,595.26

The iShares S&P Target Date 2015 (TZE) is an Exchange Traded Fund. It is a "basket" of securities that index the Target Date 2011-2015 investment strategy and is an alternative to a Target Date 2011-2015 mutual fund. Fees are very low compared to a comparable mutual fund like Oppenheimer Transition 2015 A because computers automatically manage the stocks.

The Following Target Date 2011-2015 Funds Have Lower Fees Than Oppenheimer Transition 2015 A (OTFSZ). Why are these metrics important?
Mutual Fund Name Ticker Symbol Turnover Assets (M) Annual Fees
AllianceBern 2015 Retirement Strat A LTEAX 16.0% 229 0.98%
AllianceBern 2015 Retirement Strat I LTEIX 16.0% 229 0.68%
AllianceBern 2015 Retirement Strat K LTEKX 16.0% 229 0.93%
AllianceBern 2015 Retirement Strat R LTERX 16.0% 229 1.18%
American Century LIVESTRONG 2015 A ARFAX 4.0% 892 1.03%
American Century LIVESTRONG 2015 Instl ARNIX 4.0% 892 0.58%
American Century LIVESTRONG 2015 Inv ARFIX 4.0% 892 0.78%
American Funds Trgt Date Ret 2015 A AABTX 7.0% 1,500 0.73%
American Funds Trgt Date Ret 2015 R3 RCJTX 7.0% 1,500 1.05%
American Funds Trgt Date Ret 2015 R4 RDBTX 7.0% 1,500 0.73%
American Funds Trgt Date Ret 2015 R5 REJTX 7.0% 1,500 0.42%
American Funds Trgt Date Ret 2015 R6 RFJTX 7.0% 1,500 0.38%
DWS LifeCompass 2015 A SPDAX 31.0% 140 1.19%
DWS LifeCompass 2015 S SPBAX 31.0% 140 0.94%
DWS LifeCompass 2015 S SPBAZ 31.0% 140 0.94%
Fidelity Advisor Freedom 2015 A FFVAX 19.0% 1,700 0.87%
Fidelity Advisor Freedom 2015 I FFVIX 19.0% 1,700 0.62%
JHancock2 Retirement Living 2015 R4 JLBGX 30.0% 603 1.07%
T. Rowe Price Retirement 2015 TRRGX 15.2% 6,600 0.65%
T. Rowe Price Retirement 2015 Adv PARHX 15.2% 6,600 0.90%
T. Rowe Price Retirement 2015 R RRTMX 15.2% 6,600 1.15%
Vanguard Target Retirement 2015 Inv VTXVX 27.0% 15,200 0.17%
Wells Fargo Advantage DJ Target 2015 Adm WFFFX 40.0% 806 0.84%
Wells Fargo Advantage DJ Target 2015 I WFSCX 40.0% 806 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.