Saturday, April 28, 2012
A Lesser Mousetrap
A Website called FundReveal offers a new way to pick mutual funds. Why we prefer the old ways.
Two veterans of Fidelity Investments claim to have come up with a better way for folks to pick mutual funds. Their Website, FundReveal, recommends funds based on proprietary measures of risk-and-return and managers’ decision-making abilities over long stretches of time. The contention is that this approach is more predictive than focusing on past returns and “hunches, opinions and popularity,” in the words of the Website (fundreveal.com).
Intriguing as it all may sound, I don’t care for it. The measurement criteria are explained poorly, and following the instructions is exhausting. FundReveal suggests you scroll through 20 quarters of grades for each fund that interests you to see how consistently it behaves over time. When you reach the results, the presentation is clumsy. The results are displayed in a tiny spreadsheet-style window, and while you can customize this to some degree, that, too, is difficult.
If the site unearthed some funds I wouldn’t discover elsewhere, I might be willing to wade through all that. But in my test, the picks weren’t much different from what I got from other fund screeners.
I set up a screen looking at performance over the past three years for a broad basket of commodity funds and compared it with Fidelity’s Mutual Fund Evaluator. The top two funds on the FundReveal list in this category were Classes D and B, respectively, of the Pimco Commodity Real Return Fund (PCRDX and PCRBX). Class D was second on a list from Fidelity, and carries a five-star Morningstar rating, while Class B was fifth with Fidelity and had four stars from Morningstar.
The top-ranked fund from Fidelity over the past three years is the Direxion Monthly Commodity Bull 2X (DXCLX). While it gets only two Morningstar stars, FundReveal generally likes it, awarding a “B” risk-return rating, second only to “A.” Scouring its 20,000-fund database, FundReveal finds just 61 funds that performed better than the Fidelity pick.
There’s an old saying for analyses like FundReveal’s: a long run for a short slide.
THE MOST RECENT INCARNATION of E*Trade’s iPhone app lets you get quotes or place an order using voice recognition. By tapping the microphone icon at the top corner of a screen and stating an appropriate command, you can now place trades while dashing from your car to the commuter train. This capability will be added to the Android app later this year.
E*Trade has also added the ability to scan a bar code on a product and get details on the parent company, if it’s publicly traded, for both iPhones and Androids. TD Ameritrade launched a similar feature earlier this year. Strolling through a store has never yielded so many investment ideas.
“Our mobile platform continues to grow and has become an increasingly important extension of how customers do business with us,” says Michael Curcio, president of E*Trade Securities. “These enhancements demonstrate how we continue to add innovative functionality to the mobile experience.”
AS ELECTION YEAR HEATS UP, my inbox has been the target of a few too many e-mails that have “Forward This to Everyone You Know!” in the header. These are the times when a good hoax-detector comes in handy, and the best may be Hoax Slayer (hoax-slayer.com). It could be better in terms of design and layout, but its content is top-notch and its price—free—is irresistible.
Besides debunking various hoaxes, the site offers terrific advice about recognizing and avoiding scams, online fraud, or phishing schemes. It also has links to a list of seemingly bogus e-mails that are actually true. And that video of a dog dragging another dog off to the side of a busy road while dodging traffic? It really happened.
The Urban Legends Website (snopes.com) often has more-complete explanations of hoaxes, along with an attempt to explain where a hoax came from, but I’ve found that Hoax Slayer gets their reports up faster. And in their brevity there is often the soul of wit.
Published in Barron’s, 4/23/2012.