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 Next up on our list of mutual fund reviews is Rydex Mutual Funds. Rydex used to be geared more towards the serious investor since their minimum investment for any fund was a hefty $25,000 (it is now $2,500). It's also a relatively small player in the mutual fund space, with only a little under $16 billion in assets under management.
Rydex Family of Mutual Funds
Rydex Funds is a relative newcomer to the mutual fund scene. Started in 1993 by its founder Skip Viragh, his aim when starting Rydex was to create family of mutual funds that performed well, regardless of market conditions. Rydex is also known for starting the first leveraged mutual fund - Rydex Nova Fund.
Today, Rydex offers investors leveraged equity funds, fixed income funds as well as inverse equity funds. Rydex mutual funds are offered through large brokerage houses including Fidelity, Charles Schwab, T.D. Waterhouse and E*Trade. Rydex offers more than 80 investment products tailored to a variety of market conditions including 18 sector funds. Rydex also offers retirement planning options such as traditional IRAs, Roth IRAs, Rollover IRAs, SEP IRAs, as well as 403b plans.
Rydex Funds Fee Structures and Returns
Morningstar ratings indicate that the expense ratio for mutual funds at Rydex range from average for their international stock funds (1.76%) to above average for their taxable bond fund (1.51%) and their domestic stock fund (1.76%). Although Rydex claims they offer investors options to match any market condition, this does not translate into a balance of stock and bond funds - their distribution of asset class indicates only 1.56% in bonds (taxable bond funds). In fact, nearly all assets sit in domestic stock funds or cash (89.4%) as of August 2008.
As previously mentioned, the minimum investment at Rydex is $2,500 and only 75.9% of the funds at Rydex are no-load mutual funds. As of August 2008, the average return for the Rydex family of mutual funds over the last five years is 5.83%. Once again, this must be disappointing given the founder's vision.
Top Rated Funds at Rydex
When looking at the top rated funds at Rydex, we do find some patterns. First off, none of these top mutual funds has a front-load. We also noticed that with 80 funds and $16 billion in assets under management, we'd expect an average of nearly $200 million per fund. Two of these top rated funds are considerably larger than that value.
- Rydex Sector Rotation H (RYSRX) - with $447 million in assets, this large blend mutual fund invests heavily in the manufacturing sector of the market (77.59%). Top holdings include Fluor Corporation, ExxonMobil Corporation, and Foster Wheeler, Ltd. This no-load mutual fund requires a minimum investment of $2,500 and carries an expense ratio of 1.65%. The average return over the last five years is 8.26%. (August 2008)
- Rydex Consumer Products Inv (RYCIX) - with a little over $24 million in assets, this large blend fund currently reports that nearly all (98.6%) of the assets are held in stocks. As the name implies, most of the stock is invested in the consumer goods sector. Top holdings include Procter & Gamble Company, Coca-Cola Company, and Philip Morris International Inc. This no load mutual fund carries an expense ratio of 1.37% and the average return over the last five years is 7.95%. (August 2008)
- Rydex Inverse S&P 500 Strategy Inv (RYURX) - with nearly $295 million in assets, this bear market mutual fund claims to be a domestic stock fund, however 99.9% of its assets are held in cash. It's discouraging to see a top rated fund from Rydex that does nothing more than put your money into cash investements - at least the fund does not carry a load. The expense ratio for the fund is 1.41% and the minimum investment is $2,500. The average return over the last five years is -2.98%, however the return over the last year was nearly 15%. (August 2008)
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