My 401(k) Mutual Funds: Part 1 of 6

So, as promised, here is Part 1 of brief reviewes of my 401(k) mutual funds.

American Funds Grth RGAFX

Started In: 2002

Load: No

Yield: 1.26%

Annual Turnover: 26%

Size: $193.5 billion

Expense Ratio: 0.35%

Cost: $122 per $10,000 over 3 years

MS Stars: 5

Stewardship: B

Category: Large Growth

Management: Ten experienceed managers working independently of each other, but with the same strategy.

Performance: Not bad. 11% total return in 2007 and 14.3% 5-year annualized return (which ranks #9 among peers).

Comments: MS doesn't recommend new purchases. Not a terrrible fund, but rather average. Weighed down by its enormous size. Portfolio has a very large number of holdings, even compared to its peers - this makes it less volatile, but also too tame. A lot of familiar holdings such as: Google, Microsoft, Oracle, Cisco, GE, Medtronic, AIG, Caterpillar, etc.

DFA Emerging Markets Value I DFEVX

Started In: 1998

Load: No

Yield: 1.84%

Annual Turnover: 9%

Size: $7.8 billion

Expense Ratio: 0.63%

Cost: $202 per $10,000 over 3 years

MS Stars: 5

Stewardship: NR

Category: Diversified Emerging Mkts

Management: One manager, Karen Umland, has managed it almost since inception.

Performance: 45% return in 2007 and 45% 5-year return (ranks #1 among peers in 5-yr).

Comments: 41% in Industrial Materials and 18% in Financial Services. Invests in Large-Mid Value. Almost 0% in Cash. Negative in 2000, 2001, and 2002 (lost a scary 34% in 2000!). In South Korea, India, Taiwan, South Africa, and Brazil (NOT in North America, UK/Western Europe, or Japan). Very low annual turnover. The fund doesn't show individual stock holdings, only Dimensional Emerging Markets Val Series.

DFA U.S. Small Cap Value I DFSVX

Started In: 1993

Load: No

Yield: 0.97%

Annual Turnover: 27%

Size: $8.7 billion

Expense Ratio: 0.53%

Cost: $170 per $10,000 over 3 years

MS Stars: 4

Stewardship: NR

Category: Small Value

Management: One manager, Robert Deere, has managed it almost since inception.

Performance: The fund has done pretty well over time, with negative years in 2002 and 2007 (about -10% each time). But 5-year return is 15.7% which makes it #4 in ranking among peers.
Strategy: It screens the smallest 10% of the exchange-listed universe for stocks with low price/book value ratios. That typically amounts to just fewer than 1,500 stocks from across all sectors and industries. Since its early 1993 inception, it has returned 15%, beating the S&P 500's 11% gain and the rival's near 13% climb.

Comments: Large concentrations in Financials and Industrial Materials, 22% in each one. Virtually zero assets in cash. 59% in Small and 34% in Micro. The fund doesn't show individual stock holdings, only Dimensional U.S. Small Cap Value Series. The fund is considered top-notch in its category and is managed by an advisory firm that has a solid reputation in this niche, but the wave it rode is on the way down in the choppy market conditions that are expected in 2008. Fund had negative return in 2007 and I don't think it will perform all that great in 2008, even if it stays in the black. It is certainly worth considering once the small-caps will make a come back, which could as soon as 2009.