High Yield Mutual Funds

Maximizing Your Returns

Mutual Fund Screener

There are a number of variables an investor must consider before buying high yield mutual funds and high yield bond funds. For example, there is a variable known as the capitalization, which is the amount of money put in by all the investors together.

Another variable is the volatility which indicates the magnitude of short term fluctuations. Yet another variable is the yield or how the level of returns it generates over time averaged over many years. An automated tool for finding funds that have particular values or combinations of values for each variable is known as a mutual fund screener. It lets one compare mutual funds before needing to consult a broker for mutual fund advice. Let us go through some of the most important variables.

Following are some of the top sites that allow you to screen for funds that fit your favorite criteria.

1. Yahoo Mutual Fund Screener - allows you to filter and screen by category, fund family, risk, third party ratings, returns, fees, net assets, holdings, turnover and market cap.
2. Morningstar Mutual Fund Screener - filter by fund type or category, expense ratio, and Morningstar ratings.
3. Wall Street Journal Mutual Fund Screener - pick by Lipper category, Lipper "score", return, expense, allocation or make-up of fund, price-to-earnings (PE) ratio of holdings, and bond quality rating (AAA, BB etc).
4. Bloomberg Mutual Fund Screener - asset category, fund type, fund objective, holding size, fees and expense ratios, 1,3,5 and YTD returns.
5. Barrons Mutual Fund Screener - looks almost identical to the WSJ (above), so likely both are provided by third party script.
6. The Street Mutual Fund Screener - search by symbol, fund family and style, load (fees), rating, risk, performance within some given time frame, net holdings, expense ratio.
7. CNBC Mutual Fund Screener - Create a custom screen.
8. Forbes Mutual Fund Screener - search by category, and uniquely the up grade or down grade status, expenses and fees, something they call "tax efficiency", and 5 year returns.
9. Scottrade Mutual Fund Screener - mix and match characteristics, by load, fees, asset type, class, fund family, but can only look at 1 month performance.

Fund Category

The category is a classification scheme which denotes a rough measure of the capitalization, as well as the kinds of stocks that are included in the fund. For example, an International Large Cap is one that is made up of stocks from large companies (large cap mutual funds) based outside of the U.S. Another example is the U.S. Government Short Term Bond, which is made up of short term government-issued bonds traded by entities in the U.S. People buying mutual funds are interested in particular categories much as they are in particular stocks because it reflects their knowledge and preferences for certain industries and types of securities.

Past Return

The past return is a kind of average of annual returns over some number of years. A 3 year average return is the average of the annual return over the last three years. The average is calculated in two ways so be careful of which one the screener is showing. For example, a stock shows $100, $150, and then $125. The first way to calculate it is to say that it gained $25 from $100 over two years or 25%, which is annualized to 13% per year. Yet one can also say that the gain in the first year was 50%, and from the second year to the third was -16%, which averages to 34% (17% annualized). The second picture is rosier than the first.

Expense Ratios

The total expense ratio is the amount in percentage terms that is costs to maintain shares in the fund. It is a percentage so scales up with the amount of money each investor has vested. For example, an investor who has purchased $10,000 of the ABC fund with an expense ratio of 0.5% pays $50 per year to keep his account active. This is deducted directly from the account.

Category Rank

The rank in category is a ranking of this particular fund against all its category peers, where ranking is determined by how high the yield of return is. It is important to rate against the peer group because downturns tend to be correlated among financial products that share the same pedigree. From the early 2000s until 2010, gold prices experienced a run-up in prices. Therefore all commodity mutual funds vested in gold should have also gone up in value making a comparison with those outside its category misleading or at worst unfair.