Mutual Fund Reviews: Ave Maria Bond Fund

The Ave Maria Bond Fund comes in two classes, I and R. The ticker symbols are AVEFX, and AVEHX. Except for the initial minimum investment required, fund capitalization and return, the two funds are quite similar in scope, objective and investment and are considered the same mutual fund. Moreover, the Ave Maria Bond Fund is a socially conscious, low risk mutual fund that was initiated in 2003 and has since provided yearly positive returns for its investors.

In so far as mutual funds go, the Ave Maria Bond Fund is relatively small with $45.9 million in assets according to its 2009, Q1 report. The AVEFX fund has a minimum initial investment of $1000.00, is strongly advised by Schwartz Investment Counsel, Inc. and only invests in companies that promote Catholic principles and/or beliefs. Investments held by the Ave Maria Bond Fund include companies such as Kellog, United Tech Corp. and Treasury Inflation Protected Securities (TIPS). (AVEFX Q1 Summary)

The largest amount of the Ave Maria Bond Fund portfolio's bond investments are in A rated bonds with the remainder in higher rated bonds except for a limited percentage in BBB rated bonds. A significant cash position is held in the fund along with common stock and investment in U.S. Agencies. The fund has a small dividend

Ave Maria Bond Fund performance

This fund is relatively safe, low risk, liquid and provides a small return after inflation and the .7 % expense ratio is calculated in. The funds value per share has ranged approximately between $9-10.50 since the fund's inception and at the time this article was written in 2009. Additionally, the fund is no load and as mentioned has never produced a negative average annual return to date.

MorningStar rates the Ave Maria Bond Fund with 3 out of 5 stars whereas Lipper rates the fund with its highest score for performance in several categories including tax efficiency, expense management, total return, preservation of capital and consistent returns. (lipperweb.com). The fund also won the 2009 Lipper award.

A point of note regarding the Ave Maria Bond Fund is its low turnover ratio in comparison to the category of mutual funds in which it operates. This and other qualities of sound management appear to be what the Lipper ratings system looks for whereas the MorningStar ratings may place more emphasis on total returns in comparison to other mutual funds in the same category.

Competitive positioning of the Ave Maria Bond Fund

Despite the Ave Maria Bond Fund's high marks from Lipper, the fund's returns leave more to be desired as evident with the funds ranking against similar funds within the same category and in comparison to the applicable bond index. Moreover, there are currently 1180 similar or competing funds, approximately 33% of which have higher returns both at present and historically. (finance.yahoo.com)

However, the 67th percentile ranking given to the fund is also its second highest in its history from a low of 27%. This is also in accordance with the MorningStar 3 star ranking which places the fund between the 32.5th-67.5th percentile of which the Ave Maria Fund scores close to a 4 star rating. Although the fund has consistently provided a positive return, it has also consistently performed below, until recently, the Barclays Capital Intermediate Gov/Credit Index according to the Ave Maria Bond Fund Q1 2009 report. (avemariafund.com)

Summary

The Ave Maria Bond Fund AVEFX and AVEHX is an average performing, low risk, minimal expense mutual fund. The fund advocates Catholic values and socially conscience investing and is heavily invested in U.S. Government financial instruments, such as bonds and treasury inflation protected securities.

Other positions the portfolio takes are corporate bonds, and corporate equity. There are some differences between the two classes of Ave Maria Bond Funds including a .29% difference in 5 year return, a $9,000.00 difference in minimum initial investment and a few hundred million dollars in capitalization.

The fund appears to be well managed, and both fiscally and socially responsible. In light of this and the fund's low risk nature, this fund may be a better place to store money than under a mattress. It has consistently returned more than inflation and the expense costs of managing the fund. However, the Ave Maria Bond Fund's performance is low compared to top performing financial instruments in its class and other potential investments. For those seeking more responsible investing and low risk with fair return, the Ava Maria Bond Fund may be worth considering.

Sources:

1. http://www.avemariafund.com/home.htm
2. http://finance.yahoo.com/q/pr?s=AVEFX
3. http://www.avemariafund.com/home.htm

Originally written 06/17/2009 

How to Review Security Transactions In a Mutual Fund

Mutual fund transactions are an essential aspect of mutual fund investing that can determine the success or failure of a mutual fund. These transactions can either help or hinder a mutual fund depending on their cost(s), resulting capital appreciation, capital depreciation, dividend income, leveraging etc.

If the mutual fund managers know what they are doing, these transactions will follow a sound strategy, comply with securities regulations, do so at a minimal cost and at optimal benefit to investors, the fund itself and the company under which the fund is managed.

Why mutual fund security transactions are reviewed

Sometimes investors want to know more about the fund than is readily available at any one given location or source. Mutual fund transactions are an example of this type of information because they can be quite critical to the fund and investors for investing purposes. Consequently, how to review security transactions in a mutual fund not only helps investors makes decisions as to whether or not they should invest in a particular mutual fund, but helps them understand the reasons why they should make either or decisions.

Finding information about mutual fund transactions may involve a little research which involves 1) locating the right sources of contact 2) requesting information or research methods from those sources and 3) decoding and/or reviewing the transactions. In some cases only partial information may be accessible due to the ability to find the information, time frame in which the transactions took place and/or the policy or regulations governing the mutual fund itself.

Where to find information on mutual fund transactions

Mutual funds are required to report transactions to investors on a semi-annual basis. (investopedia.com) The following link illustrates these requirements and rules by which mutual funds must abide by to maintain legality.

http://www.investopedia.com/exam-guide/finra-series-6/securities-industry-regulations/mutual-fund-rules-reporting-requirements.asp

Locating mutual fund transaction information is the first step in reviewing mutual fund transactions. Without the transaction information available, nothing can be reviewed, so knowing where to look is important. The following methods and places may assist in locating mutual fund transaction data, research or contact information for obtaining reports of mutual fund transactions.

• Call the mutual fund's investor relations department
• Contact the Securities and Exchange Commission (SEC)
• Research Mutual Fund statistics that include turnover, and investments
• Ask a broker or advisor for more information about a fund's transactions
• Review the Mutual Fund's prospectus, 10K, 10Q and other reports
• Consult a securities official, attorney or research sources for additional information

How to review security transactions in a mutual fund

Reviewing a mutual fund transaction report, if available, should not be unlike studying a financial statement such as a statement of cash flow, income statement, tax reports, account books etc. The mutual fund transactions should reveal information about the mutual fund and allow the reviewer to glean how the fund's management makes decisions, why they make the investment decisions they do, where they invest, how frequently they invest and if the transaction strategy and tactics have proven fruitful to the mutual fund and its investors. Some of the things to keeping in mind when reviewing a mutual fund transaction report, in addition to items the transactions should reveal ideally include the following:

• The transactions should match the goals of the mutual fund
• Frequent transactions or a high transaction ratio aren't necessarily good
• Reasons for the transaction(s) and research behind them
• Dollar or currency value of the transaction, time and date, volume of investment
• Product or financial instrument invested in
• Transaction fees, commissions and/or related expenses
• Loss or gain on transaction, and/or dividend information

In addition to the above information, mutual funds are subject to regulations that prevent them from legally investing in a certain manner. Due to the restrictions made possible through such regulations, mutual funds report their transaction information to securities authorities to demonstrate compliance. Some of the transactions a mutual-fund are not allowed to take part in are listed in the following securities industries regulation link. Despite reporting requirements, organizations such as the Securities Industry and Financial Markets Association (SIFA) have advocated more transparent disclosure of mutual fund financial data to investors in mutual funds. (archives2.sifma.org)

Summary

Mutual funds invest other people's money into assets the fund's managers believe are quality investments. These investments should meet the goals of the Mutual fund(s) and investors in those funds.

In managing assets within a mutual fund, the fund manager(s) may believe it is no longer beneficial to retain a certain investment or group of investments. Following this, the mutual fund may take a larger cash position or re-invest the sold assets into new assets. To do so a mutual fund transaction is necessary. In order for investors to better understand the workings and effectiveness of a mutual fund, reviewing mutual fund transactions can be helpful.

Obtaining and reviewing mutual fund transactions involves research, know how and understanding about locating the transaction information, what to look for and how to comprehend the information revealed by the transactions.

This article has outlined this process however since mutual fund transactions may not always be available to investors despite being required on a semi-annual basis, the obtaining and reviewing of up to date mutual fund transactions may not always be a possible endeavor.