Investors stuck in expensive actively managed mutual fund portfolios may have a desire to move to more cost effective investment options, but may not know exactly where to begin. ETF Database makes available a great tool to help map any actively managed mutual fund to a lower cost ETF alternative. Their Mutual Fund to ETF converter contains information on the 10,000 largest U.S. mutual funds and finds the most comparable ETF based on the underlying benchmark for each fund.
For example, using two of the most popular actively managed mutual funds – American Funds Growth Fund of America (ticker: AGTHX) and PIMCO’s Total Return Bond Fund (ticker: PTTAX) yields a number of less expensive ETF options tracking the same benchmark index as the actively managed funds. ETF alternatives for AGTHX, which uses the S&P 500 Index as a benchmark, include SPY and IVV, both of which have expense ratios nearly a tenth of that of AGTHX. ETF options for PTTAX – which tracks the Barclays Capital U.S. Aggregate Bond Index – include AGG and BND, with expense ratios nearly a half and a quarter, respectively, of PTTAX’s expense ratio. Interestingly, not only are the ETF options cheaper, but both SPY and IVV have outperformed AGTHX over the last two years, while AGG and BND have nearly equaled the performance of PTTAX with significantly less volatility over the same timeframe. Whether you’re looking to transition your portfolio to all ETFs or simply curious as to whether you’re being overcharged for investment returns that can be achieved through lower cost ETFs, this conversion tool can be a valuable resource.
