WAIIX - Western Asset Inflation Idxd Plus Bd I

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Western Asset Inflation Idxd Plus Bd I (WAIIX)
Expense Ratio: 0.33%
Expected Lifetime Fees: $10,538.84

The Western Asset Inflation Idxd Plus Bd I fund (WAIIX) is a Inflation-Protected Bond fund started on 03/1/2001 and has $587.30 million in assets under management. The current manager has been running Western Asset Inflation Idxd Plus Bd I since 03/22/2001. The fund is rated by Morningstar. This fund does not charge 12b-1 fees.

MarketRiders Prefers The Following ETF

iShares Barclays TIPS Bond (TIP)
Expense Ratio: 0.20%
Expected Lifetime Fees: $6,475.12

The iShares Barclays TIPS Bond (TIP) is an Exchange Traded Fund. It is a "basket" of securities that index the Inflation-Protected Bond investment strategy and is an alternative to a Inflation-Protected Bond mutual fund. Fees are very low compared to a comparable mutual fund like Western Asset Inflation Idxd Plus Bd I because computers automatically manage the stocks.

The Following Inflation-Protected Bond Funds Have Lower Fees Than Western Asset Inflation Idxd Plus Bd I (WAIIX). Why are these metrics important?
Mutual Fund Name Ticker Symbol Turnover Assets (M) Annual Fees
American Beacon Treas Infl Prot Sec I ATPIX 381.0% 327 0.26%
American Century Infl-Adj Bond Instl AIANX 26.0% 5,300 0.28%
American Century Inflation Prot Bd Instl APISX 85.0% 649 0.30%
DFA Inflation-Protected Securities I DIPSX 18.0% 2,200 0.13%
Goldman Sachs Infl Protected Secs Instl GSIPX 194.0% 310 0.28%
Schwab Treasury Inflation Protected Secs SWRSX 37.0% 362 0.29%
TIAA-CREF Inflation Link Bd Instl TIILX 13.0% 1,700 0.29%
Vanguard Inflation-Protected Secs Adm VAIPX 28.0% 42,800 0.11%
Vanguard Inflation-Protected Secs Instl VIPIX 28.0% 42,800 0.07%
Vanguard Inflation-Protected Secs Inv VIPSX 28.0% 42,800 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.