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AARP's mutual funds are a rip off
May 05th 09:25:01 PM
Analysis of AARP's new mutual funds illustrates they are a rip off.
For one, they generate low returns.
The AARP funds don't currently invest in emerging-markets stocks, though the prospectus permits them to do so as the funds grow. "They could be potentially leaving some returns on the table," says Philip Edwards, managing director of Standard & Poor's Investor Services.
For another, they come at a high cost compared to other funds.
Each AARP fund carries an expense ratio capped at 0.5% through Nov. 1, 2007. Still, the comparable Vanguard LifeStrategy Moderate Growth Fund (VSMGX) charges only 0.25%. That fund also includes an active element, investing 25% of its assets in Vanguard Asset Allocation (VAAPX). The actively managed Fidelity Asset Manager: Growth (FASGX) is a bit costlier at 0.82%, but Fidelity Four-in-One Index (FFNOX) has a 0.21% price tag.
For an institution that claims to know a lot about helping retirees, they sure picked a bad mutual fund manager. Find out the rest of the reasons AARPs funds can't be trusted here.
Posted by Nicola Moore
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