In his Fund Track column on Monday, The Wall Street Journal's Sam Mamudi focuses his attention on fund performance and management fees.

"It's official," Mamudi declares, "the fund industry did nicely during a harrowing 2008, even though its investors didn't." However, as the article proceeds, Mamudi does poorly in backing up his claims.

Citing Morningstar data, Mamudi cites three stock funds from American Funds and two from Fidelity as each falling more than 37 percent in 2008 and each collecting management fees of more than $300 million in their latest full fiscal years. But in presenting the numbers, he makes an apples-to-oranges comparison, saying that performance went down, then mentioning fees as a dollar number and not as a percentage of assets. He also does not give 2007 figures, nor does he mention expense ratios.

The five "big-loser, big payday funds," as Mamudi describes them, are American Funds Growth Fund of America, American Funds Capital World Growth & Income, American Funds EuroPacific Growth, Fidelity Contrafund and Fidelity Diversified International. Those funds, he says, are drawn from a list of the "20 biggest fee gatherers." He does not list the 15 other funds on the list.

In addition, he does not compare similar time periods. For example, he notes that American Funds Growth Fund of America fell 39.1 percent in 2008, and collected $351.2 million in management fees in the fiscal year ended August 2009.

In the article, Morningstar analyst Karen Dolan points out Vanguard's funds are not in the top 20, despite the Valley Forge, Pennsylvania-based firm overseeing five of the biggest mutual funds and this, she says, is because of its cost structure and the fact that many Vanguard funds are tracking indexes. What she does not note is that Vanguard fees are low because of its use of sub-advisors and its existing large client base. 

Edited by: Daniel Tovrov


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