Largest Fund Families

Last Updated Apr 27, 2010 11:51 AM EDT

Investment News has tabulated the largest investment fund families. When it comes to investing, we aren't as dumb as Wall Street would like us to be. Despite their efforts to point us in a different direction, we still tend to find the families with the lowest costs, because we know costs impact performance.

The list was originally compiled by Morningstar using data as of November 30, 2009. Here's a run-down on the top five and a brief overview on costs and performance.

Top 5 Fund Families ($ billions)

Vanguard $1,313.39
Fidelity Investments $1,215.41
American Funds $926.68
JPMorgan $449.41
iShares $360.07
Topping the list is Vanguard with over $1.3 trillion in assets. Morningstar shows Vanguard beating its category averages quite soundly over the past five years. Fees average 0.15 percent for bonds (vs. 1.03 percent for average bond mutual fund), and average up to 0.24 percent for international equities (vs. 1.59 percent for the average international mutual fund). Though Vanguard is known for index investing, it also has substantial assets in active investing.

Trailing only one hundred billion dollars behind is Fidelity. Beating its category averages by a bit less over five years, its fees are still slightly below the average mutual fund. Fidelity averages 0.88 percent for bonds, and up to 1.4 percent for international. Fidelity does offer index funds with lower fees than Vanguard, but also has advisor sold funds with hefty fees.

Rounding out the big three is American Funds, currently behind Fidelity by three hundred billion dollars. Sold only through advisors, American Funds are relatively low cost and tend to do less trading than most active funds. Its average costs are similar to those of Fidelity with 0.97 percent for bonds and 1.21 percent for international stocks. Its five year performance also beats its category.

As you can see, the asset size drops off dramatically after American Funds with numbers four and five being JPMorgan and iShares. JP Morgan has average costs, while iShares has very low cost exchange traded funds (ETFs) and is the giant in the ETF space.

Maybe investors are finally getting the message that fees and performance are inversely related.

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    Allan S. Roth is the founder of Wealth Logic, an hourly based financial planning and investment advisory firm that advises clients with portfolios ranging from $10,000 to over $50 million. The author of How a Second Grader Beats Wall Street, Roth teaches investments and behavioral finance at the University of Denver and is a frequent speaker. He is required by law to note that his columns are not meant as specific investment advice, since any advice of that sort would need to take into account such things as each reader's willingness and need to take risk. His columns will specifically avoid the foolishness of predicting the next hot stock or what the stock market will do next month.