Mutual Fund Quotes - Updated each day and include annual returns

Mutual fund quotes are much different than stock quotes since the price of a mutual fund is set at the closing market price.  The closing market price of a mutual fund is made up of the Net Asset Value of the mutual fund divided by the number of shares or units in the fund.  The Net Asset Value (NAV) is calculated as the value of all the assets in the mutual funds portfolio, less any liabilities the fund has. 

So, if you're checking the quotes during the day of your mutual fund, you will not see the price fluctuate like stock prices do.  Each day, at the end of trading, the NAV is calculated and divided by the number of shares and the mutual fund quotes are updated.

I'm going to walk you through an example of a mutual fund quote online from the Vanguard fund family with the symbol of VFINX.  This Vanguard fund is an index fund that tracks the S&P 500.

The first part of a mutual fund quote includes a product summary.  The summary is a high level view of the mutual fund that tells a few things about the fund.

• What the fund invests in.  In our quote example, it calls out that it invests in in stocks representing the Standard & Poor's 500 index.
• The Goal of the fund.  The goal of the example quote is to track the return of the S&P 500, which is considered a gauge for overall US stock returns.  Essentially providing a mirror of the market.
• What the fund offers investors.  The example calls out potential for investment growth and gives a bit on the risk of the fund, calling out that share value rises and falls more sharply than that of funds holding bonds.  Bonds are largely considered a less volatile and more secure investment with less growth potential.
• Who the fund is appropriate for as an investment vehicle.  An important part of the product summary tells the investor in the quote who this fund is appropriate for.  Again, in this example, it calls out that the fund is for long term investors where growth is important.  It doesn't state, but it implies that this fund is a poor choice for short term investors that can't handle short term, but potentially large swings in the value of the holdings.
  

Not all quotes call this section fund facts, but there will be similar sections of the quote with this information.  Fund facts include some but not all of this information and it's possible that some information is not included in the examples.

• Asset class - The asset class defines what is held in the fund.  Our example is of the S&P 500 which is US Stocks or Domestic Stock.  It's classified as General since in the largest 500 US companies, there are multiple types of companies.  It's also important to know that many companies in the US have international exposure.  For example, Microsoft is part of the S&P 500, but also has large international presences.
• Category - There are many categories of mutual funds.  The fund category typically breaks down in two dimensions.  Large Cap, Mid Cap and small Cap.  Then they are split between Value, Growth and International.  Our example says blend.  Blend is a combination of Value and Growth equities.
• Expense Ratio.  The expense ratio is a very important part of a mutual fund quote.  This is the percentage of the Net Asset Value that the fund charges for running the fund.  Index funds tend to have much lower fees than managed mutual funds.  Most experts recommend investing in no load mutual funds with expense ratios under 1%.  Our example has an expense ratio of .18% which is excellent.
• Minimum Investment.  The minimum investment is the initial minimum investment an investor can make into a fund.  Since there are multiple types of accounts an investor may have, the fund minimums may be different for each type.  In our example, the fund minimum for general accounts is $3000, but for educational accounts, it's $2000.
• Fund Advisor.  The fund advisor is who manages the fund.  This can be an individual fund manager or in this case a group of people that index the holdings to the S&P 500. 
  

One of the main reasons investors check mutual fund quotes is to get the current prices for a fund.  Price quotes typically have the following information.

• Price as of date.  This is the price of the fund as of the last date that the per unit price was calculated.  It will not update until the end of trading on that day. 
  
• Change.  This is the dollar amount that the unit price changed compared to the the previous day.  It is usually displayed in absolute dollars and as a percentage.  (todays price/yesterday's price) - 1.   If the price increased, it's shown as a positive number, if it decreased, it's shown as a negative number.
• 52 week high and low.  This is the the high and low price of the mutual fund in the previous 52 weeks which is one year. 
  
• Range.  Range is calculated as the difference between the 52 week high and the 52 week low.  This gives you a sense of the pricing range the fund has experienced. 
  

Performance quotes for mutual funds are often shown in the form of a mutual fund chart that graphs the performance of the fund over a period of time. Many mutual fund quotes will let a time period to be selected which will then show a chart with the performance over the selected period.

Performance charts typically show the the growth of a 10,000 dollar investment over the previous 1 year, 3 years, 5 years and 10 year periods.

Another important part of the performance section of a mutual fund quote is the Average Annual Returns section. The average annual return is expressed as a percentage and is often benchmarked against other funds or indexes in the same class of investment. To read the average annual returns section, it is broken down into the average annual return over 1 year, 3 year, 5 year, 10 year and since inception. The average annual return assumes dividends and capital gains are reinvested in the fund. To break this section of the quote down, take the 3 year average annual return in our example of -6.82%. This means that the investment has lost 6.82% per year for the last three years. If you invested $10,000 in this 3 year period you would now have 8,090.20 dollars, which is nearly a 20% loss.

The last portion of the performance quote section covers after tax returns.  There are several things to pay attention to about mutual fund taxes.

• Most funds use the highest federal tax rate at the time of the quote, but do not include local or state taxes in the calculation.
• If the fund is held in a tax deferred account, then this section doesn't matter for that investment since there isn't a tax consequence until a future event.

The dividends earned on the holdings are subject to taxes as well as the realized gains and losses each time a security in the fund is sold.  When a security is bought and sold, this is called the mutual fund turnover rate.  A high turnover rate can have a substantial impact on taxes, especially if the securities are bought and sold in periods of time less than one year.  If the security is held less than one year, the gains are taxed at ordinary income rates which are much higher than long term capital gain rates.  So, a fund can have a great average annual return, but by looking at the after tax return, you will get a sense of how tax efficient a fund is.  Funds with low turnover rates and funds that avoid short term trades tend to have much better after tax performance.

Part of a mutual fund quote will include a section on risk. Frequently it's on a one to five scale where five is the most risky. The rule of thumb is less risky less reward, and more risky the more reward, but this isn't always the case. Over the history of the market, small cap stocks have been the best performing asset class, but there have been long periods of time where less risky investments out performed growth stocks. The stock market tends to go in cycles where they have lasted several years. In these periods, types of stocks have done better and worse than the overall market. In general equities are considered more risky than bonds and have out performed them over the history of the market.

Since mutual funds are typically made up of several individual stocks, bonds, cash and other investments, it's helpful to know what each fund holds.  A detailed quote will have sections about how the portfolio of the fund is made up.

• Equity characteristics.  These include the number of owned equities in the fund, the median market cap of each holding, the price to earnings ratio of the overall portfolio, the price to book ratio of the portfolio, the Return on equity, earnings growth rate, foreign holdings, Turnover rate, short term reserves, Fund total net assets
• Equity sector diversification includes the percentage of equities in each sector.  Typical sectors include consumer discretionary, Consumer staples, Energy, Financials, Health Care, Industrials, Information Technology, Materials, Telecommunication services, and Utilities.
• Top ten holdings.  All mutual funds in their prospectus and detailed quotes disclose the top then holdings as of a specific date.  These are the equities that make up the largest individual holdings in the fund.  In our example, the top ten holdings make up 18.7% of the total net assets of the fund.
  

The most important part of the fees section is the loads and expense ratio.  The expense ratio is the management fee for running and operating the fund.  Our example, the fund doesn't have any additional expenses.  There is a chart comparing the expense ratio of the fund in our example to the average expense ratio of similar funds.

Minimums are the least amount you can buy to gain a position in the mutual fund.  Although the fund is the same, you may be able to hold it in different types of accounts with different initial minimums. 

After the initial investment, most funds have minimums for additional investments in the fund that people use for dollar cost averaging.  In our example, there is a minimum additional investment of $100.  The range is typically in the $50-$100 range. 

Other types of fees to watch out for include purchase fees.  Many brokerage accounts will have a purchase fee, while most fund families don't when you purchase the funds directly.  Redemption fees are charged when a feed is sold.  Redemption fees can be attached to loads as well.  When a fund is sold, some funds will charge a large fee on Class B shares.

The two main types of mutual fund distributions are dividends and capital gains.  Most funds do quarterly distributions.  The quote includes.

• The distribution type which is if it's a dividend or capital gain that's getting paid out.
• The amount of the distribution per unit
• The record date which means the date you have to own the fund to get the dividend
• The Reinvest date.  This is the date when the proceeds will be used to purchase additional shares of the fund if you choose the reinvest option.
• Payable Date.  This is the date when the distributions are paid out if they aren't reinvested.
• The Reinvest Price.  This is the price per unit that additional shares are bought at with the distribution.

Realized and unrealized gains and losses have tax implications.  Realized gains have tax implications in the tax year the gain was realized by the sale of the equity.  Realized losses can be carried forward to offset future realized gains in future tax years in a fund.  Unrealized gains and losses are those that only occur on paper, but would be realized if the the equities were sold.  Unrealized gains are useful for having an idea of future tax implications of the fund.

I recommend using the fund families website to get mutual fund quotes, especially if you are going to buy the funds.  This way there are less fees.  However, this isn't the only way to do it.  Each mutual fund has a symbol.  If you know the name of the five letter symbol, you can look quotes up on all the major money sites.  I prefer Yahoo Finance, Google Finance, or MSN Money as a free place to look up quotes only.