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You Won't Believe These Numbers

A dozen shocking statistics about fund returns, fees, and broken promises.

Karen Dolan, 07/14/2009

Investing is full of numbers, charts, and statistics; the fund industry hardly disappoints on that score. There are the old standards--total returns, yields, and expense ratios, for example--and there are plenty of mountain charts and quartile plottings. Then there are category averages, return rankings, index comparisons, and so on. But sometimes buried deep in the sea of numbers are some interesting, even shocking, figures and relationships. We regularly compile some of the ones that have caught our eye and share them with readers. Thanks to my fund analyst colleagues who contributed.

$631 Million
The fees PIMCO Total Return PTTRX raked in for the year ended March 31, 2009, according to its latest annual report. About half of that was for investment advisory services (aka Bill Gross and the rest of PIMCO's investment professionals) and the other half went to supervisory and administrative fees. These are just the fees charged by the mammoth fund and don't include the other institutional and subadvisory relationships that utilize the same strategy. Those fees have been well worth it for the thousands of investors who have experienced topnotch returns last year and over the fund's long history.

78 and Negative 46%
The number of commodity-focused exchange-traded funds that launched in 2007 and 2008--just in time for staggering losses. The S&P GSCI Index, a commonly tracked broad commodity index, shed 46% of its value in 2008.

Up 90% = Down $5 Billion
No, the math doesn't add up, but that's what happened to real estate fund investors. The average real estate fund (U.S. and global) appreciated 90% from January 1999 to December 2008, but investors in those funds lost a little less than $5 billion over that time. The reason? Most of the money rushed in near a high, well after the big gains were locked in, and then the real estate market began its fast and furious downward spiral.

9.94 Percentage Points and 3.99 Percentage Points
994 basis points is the amount by which the average intermediate-term bond fund trailed the Barclays Capital Aggregate Bond Index in 2008. Most funds owned fewer Treasuries and held a lot more in corporate issues than the benchmark. Both decisions hurt, but the trend has started to reverse. For the first half of 2009, the average fund in the category had a 399 basis-point leg up on the bogy.

55 out of 330
Those intermediate-term bond funds didn't only have a hard time besting the index, but 17% of them (or 55 out of 330) lost more than 10% in 2008.

Nine and 10%
Nine diversified domestic equity funds with at least $100 million in assets have posted an average annualized return of at least 10% for the trailing 10 years through the end of June. Only one of those nine funds was a large-cap fund: CGM Focus CGMFX.

8.41% and 3.31%
The average year-to-date return through the middle of 2009 of diversified domestic equity funds that finished in the bottom quartile in 2008 is 8.41%. The average year-to-date return for those that finished in the top quartile last year is 3.31%. As investors have become more optimistic about financials and the economy, some of the stocks--and the funds that owned them--that fell the farthest have come back. Meanwhile, the more conservative portfolios that proved more resilient last year haven't had quite the same bounce.

65% and 15%
The short interest in the Financial Select Sector SPDR XLF on May 31, 2008, and Nov. 14, 2008. Short interest measures what percentage of the ETF's outstanding shares are held short by investors betting on a decline. The return on the index during that period was negative 48.6%. (This short interest data was provided by ALPS.) 

25.7% to 6.8%
The 10-year return of Matthews Korea MAKOX was 25.7% on June 30, 2008.  One year and a big loss later took the 10-year return down to 6.8%.

Negative 8.13%
That's the average 2008 loss posted by funds with "absolute return" in their names. Investors have come to think of absolute return as synonymous with positive returns year-in-year-out, but that's not a promise these funds were able to keep last year.

Nine and 297
Nine ETFs have more than $10 billion in assets, and 297 have less than $25 million. Time will tell how long some of the smaller ETFs can survive on such a small base.

Negative 70% and Negative 72%
The peak-to-trough loss of Ariel ARGFX and Legg Mason Value LMVTX, two prominent funds particularly hard-hit during the market decline. (We used the S&P 500's peak close of Oct. 9, 2007, and trough of March 9, 2009.) Ariel has gained 68%, and Legg Mason Value has gained 55% from March 10 through July 2. Those are big rebounds, but it's going to take much more than that to make up all the lost ground. Given the tough arithmetic of losses, the funds would have to more than triple from their March lows to get back to even.

Have you come across any shocking fund statistics of your own? You can post them in the comments section at the bottom of this page.

Karen Dolan is Morningstar's director of fund analysis.

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