One of the most important attributes to consider when purchasing a fund is the price of the performance you’re paying for.
Using Morningstar Direct, we found that not all funds give you a guaranteed loss of more than four percent in management fees. Some funds have fees that rival exchange traded funds.
Morningstar’s director of investment research Ian Tam points out that management fees are explicitly subtracted from what we call the expected gross-of-fee Alpha which is a weighted average of our People, Process and Parent ratings. This net-of-fee alpha is then directly compared to other funds in the same category to arrive at our medalist rating.
Here are three low cost, gold-rated funds, with great 5-year annualized, quarter-end returns.
First up, at a bargain of only 0.27% in fees, we have Dimensional Fund Advisor’s US Core Equity Class F.
At that low cost, this largely large-cap, US-focused fund has returned an impressive 11.83% annualized over the last five years. Led by a four-person management team, two of whom have led the fund since 2010, its people and process pillars are rated above-average. DFA’s commitment to stewardship has earned this fund a high rating for its people pillar.
The next one is for all you dividend and distribution fans out there.
Although this fund comes at a cost of 1.11% a year, it’s a fairly regular capital gain distributor and has an impressive 5-year performance track record. Dynamic Global Dividend Class has returned 15.88% annualized over the last five years. It’s been led by portfolio manager David Fingold for the last twelve years, helping to earn it a high people pillar rating, along with another high pillar for the fund’s processes.
Last, but certainly not least, we have a fund that is far from square.
RBC’s QUBE Low Volatility U.S. Equity Fund has delivered 16.31% annualized over the last five years – at a cost of only 0.76% a year. Three managers, including Bill Tilford since 2013, have earned this portfolio a high people pillar rating. They use a large value investment style that’s earned the fund an above-average process pillar, within an above-average parent pillar.
We believe these three funds demonstrate that quality, actively managed investments can be affordable. And with a little active research on your part, they can also be golden opportunities.
For Morningstar, I’m Andrew Willis
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