Demystifying Fund Analysis: A Comprehensive Guide to Using the FINRA Fund Analyzer

Choosing the right investment, account type, and brokerage firm can feel like navigating a labyrinth. The FINRA Fund Analyzer is a powerful tool designed to cut through the complexity and empower investors to make informed decisions. This in-depth guide will walk you through the analyzer's features, functionalities, and advanced options, ensuring you maximize its potential for your financial planning.

What is the FINRA Fund Analyzer?

The FINRA Fund Analyzer is a free online tool provided by the Financial Industry Regulatory Authority (FINRA). It allows you to compare the costs and projected future values of various mutual funds, Exchange Traded Funds (ETFs), Exchange Traded Notes (ETNs), and money market funds under different scenarios. By inputting your investment parameters and utilizing advanced options, you can gain valuable insights into how fees, expenses, and other factors can impact your investment returns.

Types of Calculations Available

The Fund Analyzer offers a wide array of comparative analyses, allowing you to evaluate different investment strategies. Here's a breakdown of the scenarios you can explore:

1. Same Fund, Different Share Class, Same Account Type: Compare the costs and performance of different share classes (A-shares, C-shares, etc.) of the same fund within the same account type (e.g., a brokerage account). This helps you determine which share class is most suitable for your investment horizon and risk tolerance.
2. Same Fund, Same Share Class, Different Account Type: Analyze the impact of holding the same fund and share class within different account types, such as a brokerage account versus a wrap account (advisory account). This comparison highlights the differences in fees and how they affect your overall returns.
3. Same Fund, Same Share Class, Different Brokerage Firm: Evaluate the cost differences of holding the same investment at different brokerage firms. This analysis takes into account varying fee structures and potential shareholder benefits, such as Rights of Accumulation (ROA) or Letters of Intent (LOI).
4. Same Fund, Same Share Class, Different Platform: Assess the impact of different brokerage platforms on your investment's cost and value. For example, compare a standard brokerage account with a No Transaction Fee (NTF) platform.
5. Different Fund, Same Share Class, Same Account Type: Compare the performance of different funds with the same share class within the same account type. This allows you to see how different investment strategies and expense ratios can affect your returns.
6. Different Fund, Different Share Class, Same Account Type: Compare various funds with different share classes within the same account type to identify the most cost-effective investment for your goals.
7. Different Fund, Different Share Class, Different Account Type: Analyze a more complex scenario involving different funds, share classes, and account types to reflect various investment goals, such as saving for college versus retirement.
8. Different Investment, Same Platform, Same Pricing: Evaluate the costs and benefits of different investment options within the same platform and pricing structure.
9. Different Investments, Same Platform, Different Pricing: Compare various investments within the same platform but with different pricing structures, such as no-load funds versus load-waived A-shares.
10. Different Investment, Different Platform, Different Pricing: Analyze different investments, platforms, and pricing structures to determine the best approach for your unique financial situation.

Getting Started: Using the Search Function

The heart of the Fund Analyzer is its powerful search function. You can search for funds using several criteria:

• Ticker Symbol: (e.g., ABCDX)
• Fund Name: (e.g., ABC Capital Appreciation Fund)
• Fund Family Name: (e.g., Aberdeen, Janus, Vanguard)
• Keyword: (e.g., aggressive, conservative, balanced)

The search results display the closest matches based on fund name, ticker, fund family, Prospectus Objective, and Morningstar Category.

Key Features:

• Quick Results: Provides immediate matches based on your search term.
• Selection Basket: Allows you to select up to three funds for comparison.
• Duplicate Fund: Enables you to analyze how different cost structures affect your investment.
• Sort Results: Sort by name, annual expense ratio, or fund category.
• Favorite Funds: Save funds to a personalized list for easy access.

Using Search Filters

For more refined searches, the Fund Analyzer offers a suite of filters. Click the "Filtered Search" link on the homepage to narrow your options. You can filter by:

• Asset Class
• Fund Category
• Expense Ratio
• Morningstar Rating

Understanding the Analyzer's Results

After selecting your funds and clicking "Analyze," the Fund Analyzer generates a comprehensive report. The initial display shows results based on default parameters:

• Initial Contribution: $10,000.00
• Rate of Return: 5%
• Holding Period: 10 years

You can customize these values to reflect your investment scenario.

Key Components of the Results:

• Summary: Provides an overview of total costs and projected future account values.
• Cost Chart: Visualizes the cost components, including annual operating expenses, sales charges, and commissions.
• Annual Operating Expenses: Compares the fund's expense ratio to the average for similar funds based on product type, share class, and Morningstar data.
• Fund Cost and Value Over Time: Analyzes total costs, future value, contributions, withdrawals, and return over time.

In-Depth Analysis Tabs Include:

• Total Cost: Displays total costs for your investment scenario.
• Future Value: Projects the future value of your investments after deducting fees.
• Contributions and Withdrawals: Models the impact of contributions and withdrawals on your account.
• Return Over Time: Shows a range of account values for different holding periods and rates of return.
• Trade Frequency: (Appears when transaction shares are configured) Displays account values for various trading frequencies.
• Discount Qualification: Provides data on available discounts for each fund.
• Average Annual Return: Displays historical average annual returns as reported by Morningstar.
• General Information: Presents key fund details, including contact information, investment objective, expense ratios, and fees.

Advanced Options: Tailoring the Analysis

The Fund Analyzer's true power lies in its advanced options, which allow you to model complex financial scenarios. To access them, click the "Advanced Options" link on the report page.

Here's a breakdown of the advanced options:

• Future Contributions: Model annual contributions, specifying the amount, start year, and end year.
• Annual Withdrawals: Define a series of withdrawals, selecting the withdrawal type ($0.00 end amount, end value goal amount, or custom withdrawal amount) and specifying the start and end years.
• Existing Assets: Include existing assets (e.g., from a 401(k)) in the analysis, accounting for their expense ratio and return.
• Rights of Accumulation (ROA): Factor in ROA benefits, which can lower sales charges by combining existing assets with new contributions.
• Letters of Intent (LOI): Model the impact of LOIs, which can reduce sales charges based on your commitment to make future purchases.
• Future Rates of Return: Specify different rates of return for each year of the investment.
• Loads, Commissions and CDSCs: Customize sales loads, commissions, and contingent deferred sales charges (CDSCs).
• Wrap Accounts and Flat Account Fees: Include advisory account fees or flat account fees in the analysis.
• Account Aggregation: Account for potential discounts based on total assets held at a firm.
• Trade Cost and Annual Turnover: Model the impact of trade costs and annual turnover rates, particularly for transaction shares or ETFs.
• Ticket Charges: Define ticket charges that may apply to trades on a specific platform.

By carefully utilizing these advanced options, you can create a highly personalized and accurate investment analysis.

Sharing and Saving Your Analysis

The Fund Analyzer makes it easy to share your results with others:

• Share: Click "Share" in the left menu to send an email with a link to your analysis. The link is valid for 90 days.
• Print: Click the "Print" icon to generate a printer-friendly version of the report, which you can save as a PDF.

Conclusion

The FINRA Fund Analyzer is an indispensable tool for investors seeking to make informed decisions. By understanding its features, functionalities, and advanced options, you can gain valuable insights into the costs and potential returns of various investment options.

Remember: While the Fund Analyzer provides valuable data, it's essential to consult with a qualified financial advisor to develop a comprehensive investment strategy that aligns with your unique financial goals and risk tolerance.