How it works
The Wells Fargo screener is open to anyone, and makes it easy to sort through data. Investors can filter available mutual funds by several criteria, including type of fund, fund family, and fees.
“Fees are one of the key things that a client should look at,” Patin says. “The more money you can invest vs. paying fees, the harder that money is going to be working.”
To that end, the screener allows investors to choose load or no-load funds. A “load” is a percentage charged to an investor when shares in the mutual fund are bought or sold. Mutual funds may also charge transaction fees, which cover costs involved in buying and selling securities within the fund’s collection of assets.
Investors using the screener can also see what a mutual fund’s expense ratio is — the percentage of a fund’s assets that are charged to investors each year to cover fund expenses such as management fees and operating costs.
The screener also provides data on other criteria for evaluating mutual funds, including the fund’s Morningstar performance rating, how long it’s been managed by its current manager, and risk measurements, such as the fund’s alpha and beta.
Alpha: Alpha measures the difference between a portfolio’s actual returns and its expected performance, given its level of risk as measured by Beta. Alpha combines the volatility the portfolio’s price has experienced relative to the market and the returns the fund has generated relative to the market, to define the “excessive risk” of the fund. A negative Alpha means a portfolio has underperformed its index relative to how much volatility has been shown.
Beta: Beta is a quantitative measure of the volatility of a given stock, mutual fund, or portfolio, relative to the overall market, usually the S&P 500®. Specifically, the performance the stock, fund, or portfolio has experienced in the last five years as the S&P moved 1% up or down. A Beta above 1 is more volatile than the overall market, while a Beta below 1 is less volatile.
Once you’ve narrowed down the mutual fund choices to a handful, the screener allows you to select as many as three funds to compare side-by-side. Clients of Wells Fargo Advisors can buy mutual funds directly from their accounts.
Some investors may not want to dive into all the details. For them, the Wells Fargo Advisors Mutual Fund Screener provides the WellsTrade® Mutual Fund Screened List.
The funds on this list are no-load funds screened on a handful of criteria, such as being open to new investors, having at least $100 million in assets under management, and having managers with at least three years’ tenure.
Patin emphasizes that this kind of pre-selected list isn’t meant to be a recommendation, but can be useful for some investors, particularly those new to investing who aren’t sure where to begin.
In the end, while the screener is a great way for anyone to gather information to help make an informed purchase decision, it is not a substitute for professional advice. Investors still need to consider their goals, risk tolerance, and other factors when choosing mutual funds.
“You really have to take a look at your own risk tolerance,” Patin says. “What is your time horizon? What are your liquidity needs? What am I going to be using this investment for? It’s really a personal decision.”