Irreverent Maxfunds Is Worth a Look
Don’t you hate it when you read in some magazine about “The One Mutual Fund You Must Buy This Instant--or You’re a Total Loser!” . . . so you do, and then it tanks?
Maxfunds.com Inc.’s Web site (https://www.maxfunds.com) tries to steer fund investors away from performance-chasing and other common mistakes. Though the site seeks to be a comprehensive resource for fund investors by providing research and preaching the usual gospel of risk assessment, low expenses and no loads, Maxfunds also has staked out undiscovered funds as its forte.
The site, the creation of Jonas Max Ferris and Jason Burr, who were business classmates at the University of Georgia, takes an irreverent approach. It scoffs at the usefulness of past performance in estimating future fund results. The site generally seeks to recommend young funds, often with relatively little in assets, rather than fat funds that either might be overly diversified or that might have been propelled largely by a recently hot sector.
What Clicks: The site’s contrarian take may be its main asset, but it also offers a solid menu of news and columns, screening tools and standing resources such as a “plain-English” dictionary. Among the recent stories: a look at “life-cycle” funds (those designed for people of certain ages, not unlike what some pet-food companies do to market animal feed); a Q&A; with a biotech fund manager; a peek at the new Alleghany/Veredus SciTech Fund; and an analysis of--yawn--gold funds (still not glittering, in case you were wondering).
Among the site’s best stuff:
* “Maxratings,” based on a proprietary fund-rating formula that its developers consider a potentially better future-performance indicator than past results. A fund’s size (smaller and nimbler is supposedly better), the strength of its family, “actual wealth created” (more on that below) and the level of portfolio diversification are among the factors used.
In the mid-cap value category, as an example, Federated Mid-Cap recently had the highest Maxrating, though its three-year return ranked No. 8 in the sector.
* “Maxreturns,” which estimate actual wealth created by a fund in the past by weighing cash inflows against stated returns. The idea is to show what a fund has done for its average investor, essentially adjusting returns for those who came late to the game.
Typically, the difference between “traditional” and “Max” returns can be up to a few percentage points a year. But for some suddenly hot or cold funds, the difference can be far greater.
* “Undiscovered fund” rankings. While many fund evaluators avoid pipsqueaks, Maxfunds includes in its universe of 1,750 funds about 250 funds that are too tiny to have Nasdaq ticker symbols. Generally, these funds have less than $15 million in assets and fewer than 1,000 investors. Maxfunds usually provides links to the funds’ Web sites for more information.
In the undiscovered-funds category, while Loomis Sayles Worldwide had the top three-year Maxreturn, BNY Hamilton Small Company Growth had the best three-year traditional return and Strong Conservative Portfolio had the highest Maxrating.
* “Max-o-Mizer 3000,” an unusual and fun--though some might say hokey or even dangerous--interactive tool that recommends an asset-allocation strategy for you after assessing your investment horizon and risk profile.
Among the factors it includes are your answers to the questions of whether you own a convertible (car, presumably, not bond) and whether you would eat at a well-known, if so-so, restaurant chain when traveling or gamble on an unknown restaurant.
What Doesn’t Click: The Fund-o-Matic screening tool is a tad rudimentary. You can screen for the best Maxratings, for example, over any period within any fund category, but you can’t easily screen for funds with long manager tenures or low expense ratios, as you can at Morningstar Inc.’s site (https://www.morningstar.com) or Microsoft Inc.’s MoneyCentral (https://www.investor.com).
Also, Morningstar’s commentators, such as Russ Kinnel and John Rekenthaler, are more authoritative and insightful. And Maxfunds’ Java-heavy design can be a pain, depending on your taste and browser settings.
All in all, the site’s fund rankings are certainly novel, though it remains to be seen whether they pick out future fund stars. Still, as a second opinion when hunting for interesting funds, Maxfunds.com is worth a long look.
Site Rating: 1.9 (on a scale of 1=strong bookmark, 5=World Wide Worthless).
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E-Valuation is an occasional feature rating financial Web sites. Josh Friedman can be reached at josh.friedman@latimes.com.
