RBOFX - American Funds Interm Bd Fd of Amer R5

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American Funds Interm Bd Fd of Amer R5 (RBOFX)
Expense Ratio: 0.35%
Expected Lifetime Fees: $11,154.10

The American Funds Interm Bd Fd of Amer R5 fund (RBOFX) is a Short-Term Bond fund started on 05/15/2002 and has $9.60 billion in assets under management. The current manager has been running American Funds Interm Bd Fd of Amer R5 since 01/22/1991. The fund is rated by Morningstar. This fund does not charge 12b-1 fees.

MarketRiders Prefers The Following ETF

Vanguard Short-Term Bond ETF (BSV)
Expense Ratio: 0.11%
Expected Lifetime Fees: $3,595.26

The Vanguard Short-Term Bond ETF (BSV) is an Exchange Traded Fund. It is a "basket" of securities that index the Short-Term Bond investment strategy and is an alternative to a Short-Term Bond mutual fund. Fees are very low compared to a comparable mutual fund like American Funds Interm Bd Fd of Amer R5 because computers automatically manage the stocks.

The Following Short-Term Bond Funds Have Lower Fees Than American Funds Interm Bd Fd of Amer R5 (RBOFX). Why are these metrics important?
Mutual Fund Name Ticker Symbol Turnover Assets (M) Annual Fees
American Funds Interm Bd Fd of Amer F-2 IBAFX 80.0% 9,600 0.34%
American Funds Interm Bd Fd of Amer R6 RBOGX 80.0% 9,600 0.30%
Baird Short-Term Bond Inst BSBIX 61.1% 1,100 0.30%
DFA Short-Term Extended Quality Portfolio Institutional Class DFEQX 17.0% 1,700 0.22%
Federated Interm Govt/Corp Instl FGCIX 103.0% 364 0.32%
JPMorgan Short Duration Bond R6 JSDUX 40.0% 11,300 0.31%
Schwab Short-Term Bond Market SWBDX 94.0% 377 0.29%
TIAA-CREF Short-Term Bond Inst TISIX 146.0% 845 0.30%
Vanguard Short-Term Bond Index Inv VBISX 67.0% 24,700 0.22%
Vanguard Short-Term Bond Index Signal VBSSX 67.0% 24,700 0.11%
Vanguard Short-Term Investment-Grade Adm VFSUX 47.0% 39,400 0.11%
Vanguard Short-Term Investment-Grade Ins VFSIX 47.0% 39,400 0.07%
Vanguard Short-Term Investment-Grade Inv VFSTX 47.0% 39,400 0.20%

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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.