D4 Business 2R SUNDAY, DECEMBER 20, 2015 MutualFunds SECOND HELPING OF BOOBY PRIZES Your Funds Chuck Jaffe Syndicated columnist When it comes to the holidays, there’s noth­ ing quite like second helpings, an overindul­ gence in the gluttony and excess that feels good, even when it isn’t. And so it goes with the fund industry this year, where there was plenty of piggishness and stupidity for investors to gawk at. Last week, this column presented part I of my 20th annual Lump of Coal Awards; today, we finish the job. Started in 1996 when I worked at The Bos­ ton Globe, the Lumps of Coal are now a two­week holiday tradition, highlight­ ing the fund industry’s bad boys and girls, the ones who deserve an inky chunk of carbon in their Christmas stockings. Lousy performance alone is not enough to justify these booby prizes. The Lump of Coal Awards recog­ nize managers, executives, firms, watchdogs and other fund­industry fumblers for actions, attitudes, behav­ iors, execution or results that are misguided, bum­ bling, offensive, disingenu­ ous, reprehensible or just plain stupid. And now for the rest of this year’s losers: • Bill Gross, for promising nimble but delivering clum­ sy. When Gross fled PIMCO in 2014 amid management strife to join Janus and start Janus Global Unconstrained Bond (JUCAX), investors were sure the legendary manager would immediate­ ly live up to his narrative of greatness. Gross would have a small, nimble fund again, capable of profiting quickly and easily from his observations. But didn’t happen in 2015. Janus Global Uncon­ strained is down more than 1.5 percent this year, well below average in its Morn­ ingstar peer group. Worse for Gross is that the bulk of the money in his billion­dol­ lar new fund, reportedly, is his own. Adding insult to injury is that Gross’s old flagship, PIMCO Total Re­ turn (PTTAX) ranking in the bottom third of its peer group is up this year and ranks in the top 40 percent of its category, despite be­ ing about 85 times larger than Gross’s new fund. • Navigator Sentry Man­ aged Volatility, for manag­ ing to add volatility to shareholder portfolios. The fund’s year­to­date decline of more than 28 percent is more than three times worse than the next biggest loser in the group. That feels like mismanaged volatility to shareholders. • Kaizen Hedged Premi­ um Spreads, for taking “uncorrelated” to the ex­ treme. The new Kaizen Hedged Premium Spreads I opened August 3 promising “risk­ adjusted returns which are uncorrelated to the broader markets.” August, of course, was the worst month for those broader markets in years, down more than 6 percent. On Aug. 21, as the broad market entered its worst stretch, the Kaizen fund dropped 16.65 per­ cent, which it compounded by dropping another 23.7 percent the following Mon­ day. The fund rebounded with double­digit gains on Tues­ day and Wednesday, but the long/short fund by then had already shown inves­ tors would have preferred to be more closely correlat­ ed to a volatile market than getting clobbered by, ac­ cording to Morningstar, the two single­worst perfor­ mance days registered by any fund this year. • Management at Hodges Pure Contrarian, for making investors pay for stubborn determination. The Hodges fund (HDP­ CX) clearly tries to swim upstream, but doubling down on bets on oil and struggling stocks left this fund feeling like a pure loser, down more than 30 percent year­to­date and ranking dead last in Lipper’s mid­cap core category. That’s nearly double the decline of the fund that’s next­to­last in the group. Co­manager Craig Hodg­ es said it comes with the territory of buying disap­ pointments that may need two or three years to turn around. The good news for shareholders is that the last time the fund finished dead last in its peer group — 2011, when it lost nearly 25 percent — it rebounded with two top­10 years. That hints at a possible turnaround, but it can’t erase the smell of just how bad the fund has been this year. • PIMCO and Invesco, for their battle to have the most off­target performance of the year. You can find PIMCO’s RealPath and RealPath Blend entries in the bottom five of every Lipper category for mixed­asset target­date funds. An above­average alloca­ tion to emerging markets and a focus on inflation protection appear to be the primary cause of the firm’s underperformance. Having 40 percent of the bottom five in every target­ date category is terrible, but Invesco’s Balanced­Risk Retirement series — which use a “risk­parity” strategy that increases bond weight­ ings and that some advisers find controversial — fin­ ished last in every target­ date year ending in zero. That means it did even worse than PIMCO in every category where the two compete (Invesco doesn’t have funds for years ending in 5). One extra target­date note: PIMCO and Invesco’s battle for the bottom makes Manning & Napier the luck­ iest fund company of the year, because few people have noticed that the firm’s target­date entries is right there at the bottom with PIMCO in all eight dated categories. • Management at Third Avenue Focused Credit, the Lump of Coal Mis­Managers of the Year. The question the entire financial­services industry is asking right now is whether the Third Avenue Focused Credit fund was an outlier, or the harbinger of more collapses in a junk­ bond blowup. The question investors have is how much of their money they will ultimately get back. Third Avenue Focused Credit (TFCVX) appears to have bought the worst junk in the universe, so long as it paid an outsized yield. The fund was down about 30 percent this year and had seen investors pulling out in droves when it made the unprecedented move of stopping redemptions with­ out even contacting the Securities and Exchange Commission to say it was locking shareholders in. The day­to­day life of a fund manager involves spending a lot of time think­ ing about liquidity, and what to do if a fund faces redemptions, but these knuckleheads appear to have had blinders on, and lacked a fallback position once cash in the portfolio was exhausted by people checking out. They faced unloading their junk at fire­sale prices to pay other defectors, which forced the shutdown to allow an or­ derly liquidation. How much it saves share­ holders is unclear. Manage­ ment bungled its responsi­ bility to increase its cash cushion as it saw trouble mounting. The good news for the industry is that while the junk­bond market is affect­ ed, most industry watchers think Third Avenue Focused Credit is the unusual case, not the norm because it takes real, unique genius to be this stupid. Chuck Jaffe is senior columnist for MarketWatch. He can be reached at cjaffe@marketwatch.com or at P.O. Box 70, Cohasset, MA 02025­ 0070. Copyright, 2015, MarketWatch Fund Tracker Weekly spotlight on mutual fund performance Winners and losers: A mutual­fund scorecard Fund Wkly % YTD % obj return return Biggest funds American Funds A AmcpA pe American Funds A AMutlA px American Funds A BalA p American Funds A BondA p American Funds A CapIBA p American Funds A CapWGA p American Funds A FdInvA p American Funds A GwthA p American Funds A IncoA p American Funds A ICAA px American Funds A N PerA p American Funds A SmCpA p American Funds A WshA px BlackRock Instl StrIncoOpp BlackRock Instl GlbAlloc r DFA Funds USCorEq2 Dimensional Fds USLgVa Dodge&Cox Income Dodge&Cox IntlStk Dodge&Cox Stock DoubleLine Funds TRBd I FPA Funds FPACres Fidelity Freedom FF2020K Fidelity Freedom FF2030K Fidelity Invest Balanc Fidelity Invest BlueChGr Fidelity Invest Contra Fidelity Invest GroCo Fidelity Invest LowP r Fidelity Invest Puritn Fidelity Invest TotalBd Fidelity Selects Biotch FidelitySpartAdv 500IdxAdv x FidelitySpartAdv TotMktAd rx Frank/Temp Frnk A IncomA p Frank/TmpFrnkAdv GlbBdAdv Harbor Funds CapApInst Harbor Funds Intl r MFS Funds I ValueI Metro West Fds TotRtBdI Oakmark Funds I EqtyInc r Oakmark Funds I Intl Oakmark Funds I Oakmark PIMCO Instl PIMS AllAsset PIMCO Instl PIMS TotRt PIMCO Funds Instl Income Price Funds BlChip Price Funds CapApp Price Funds EqInc Price Funds EqIndex Price Funds Growth Price Funds MidCap Price Funds N Horiz Price Funds N Inc Price Funds Ret2020 x Price Funds Ret2025 x Price Funds Ret2030 x Price Funds Value Schwab Funds S&P Sel Vanguard Admiral BalAdml Vanguard Admiral 500Adml Vanguard Admiral GNMA Ad Vanguard Admiral HlthCr Vanguard Admiral IntGrAdm Vanguard Admiral ITAdml Vanguard Admiral ITGrAdm Vanguard Admiral LtdTrAd Vanguard Admiral MCpAdml Vanguard Admiral PrmCap r Vanguard Admiral STIGrAd Vanguard Admiral SmCAdm Vanguard Admiral TtlBAdml Vanguard Admiral TStkAdm Vanguard Admiral WellslAdm Vanguard Admiral WelltnAdm Vanguard Admiral WdsrIIAd Vanguard Fds TotIntBInv Vanguard Fds DivdGro Vanguard Fds STAR Vanguard Fds TgtRe2015 Vanguard Fds TgRe2020 Vanguard Fds TgtRe2025 Vanguard Fds TgRe2030 Vanguard Fds TgtRe2035 Vanguard Fds TgtRe2040 Vanguard Fds TgtRe2045 Vanguard Idx Fds ExtMkt I XC LV BL IB GL GL LC LG BL LC GL GL LC GT MP XC LV IB IL LV MT MP MP MP BL LG LG XG MC BL IB HB SP XC BL WB LG IL LV IB BL IL LC MP IB GT LG BL EI SP LG MG SG IB MP MP MP LV SP BL SP MT HB IL IM IB SM MC LC SB SC IB XC BL BL LV WB EI BL MP MP MP MP MP MP MP MC IL SP XC Vanguard Idx Fds TotlIntl Vanguard Instl Fds InstIdx Vanguard Instl Fds InsTStPlus 5­yr % return ­0.6 ­1.0 +12.2 ­0.8 ­5.1 +10.1 ­0.4 +0.6 +9.8 ­0.4 +0.4 +3.3 +0.1 ­4.4 +6.4 +0.4 ­3.5 +6.9 ­0.5 +1.5 +11.1 ­0.2 +3.5 +11.9 ­0.3 ­2.9 +8.2 ­0.9 ­3.8 +10.4 +0.3 +3.8 +9.0 +0.7 +1.1 +7.1 ­1.2 ­2.6 +11.6 NA NA NA ­0.1 ­1.9 +4.5 ­0.8 ­4.9 +10.9 ­0.5 ­5.5 +12.1 ­0.3 ­0.4 +3.7 +0.2 ­12.4 +2.8 ­0.8 ­6.4 +11.4 NA NA NA ­0.3 ­3.4 +7.5 +0.1 ­1.1 +5.7 +0.1 ­1.5 +6.6 ­0.3 ­0.7 +8.9 +0.6 +4.8 +14.2 +0.1 +5.2 +12.5 +0.5 +6.3 +14.8 ­0.9 ­2.0 +11.2 ­0.1 +0.6 +9.1 ­0.4 ­0.3 +3.7 +3.5 +11.1 +31.6 ­0.3 ­0.6 +12.3 ­0.3 ­1.5 +11.9 ­1.0 ­9.6 +5.0 +1.2 ­3.9 +2.9 0.0 +9.3 +14.0 +0.3 ­5.3 +2.6 ­0.7 ­2.5 +11.5 ­0.3 +0.4 +4.8 ­0.9 ­6.0 +6.7 ­1.2 ­5.7 +5.4 ­1.0 ­5.8 +12.3 NA NA NA ­0.1 +1.1 +3.8 NA NA NA +0.4 +9.4 +15.4 ­0.4 +3.9 +11.3 ­0.5 ­8.7 +8.5 ­0.3 ­0.8 +12.1 +0.4 +9.2 +14.4 ­0.6 +4.4 +12.7 ­0.1 +3.4 +15.3 ­0.4 +0.4 +3.3 ­0.1 ­1.4 +7.2 0.0 ­1.3 +7.7 0.0 ­1.3 +8.2 ­0.1 ­3.8 +12.4 ­0.3 ­0.7 +12.3 ­0.3 ­0.5 +8.7 ­0.3 ­0.6 +12.3 ­0.1 +1.5 +3.3 +0.9 +10.5 +21.2 +0.6 ­1.5 +4.0 0.0 +2.8 +4.8 ­0.6 +1.8 +4.7 ­0.1 +1.3 +1.9 ­0.5 ­3.5 +11.2 +0.2 +0.9 +13.9 ­0.2 +1.2 +2.2 ­0.5 ­5.3 +10.2 ­0.4 +0.7 +3.3 ­0.3 ­1.5 +12.0 ­0.2 +0.9 +7.7 ­0.2 ­0.9 +9.1 ­0.5 ­4.9 +11.0 0.0 +1.3 NS +0.1 +1.0 +12.5 ­0.2 ­1.1 +7.7 ­0.1 ­1.2 +6.4 0.0 ­1.5 +6.9 0.0 ­1.9 +7.3 +0.1 ­2.2 +7.6 +0.1 ­2.6 +7.9 +0.1 ­3.1 +8.1 +0.1 ­3.1 +8.1 ­0.3 ­4.9 NS Best performers NewAlt Direxion Fds EmgMBull p Alger Funds I CapApprI Price Funds AME Fd Price Funds InstAX­fd r Kaizen HgdPrSprd Fidelity Invest ChinaRg r Frank/Temp Frnk A BioDisA p Fidelity Invest EMEAfrC Fidelity Selects Biotch Matthews Asian IndiaInv r Columbia Class A GrChinaA x EuroPac Funds EMSmCoA Fidelity Advisor A Biotech A Neubrgr&Berm Fds GtChinEq I Westcore FlexInc r Frank/Temp Frnk A IndiaGrA p Alger Funds A CapApr Rydex Investor Utilities Columbia Class Z EmgMkt r Matthews Asian China Inv Rydex Investor Biotech Oberweis Funds ChinaOpp John Hancock A GtChinaOp Jacob Funds USSmCG I x 361 Funds GblCtrtrd I Wasatch IntlOppt r Fidelity Spartan EMktDisc Fidelity Spart Adv EmMktIdx BNY Mellon Funds EmgMkts Worst performers +0.8 ­0.3 ­0.3 ­5.8 +1.4 ­0.6 +12.4 ­1.4 +12.1 Fund Wkly % YTD % obj return return SE SQ LG EM EM SQ PR HB EM HB PR PR PR HB PR HC PR LG UT EM PR HB PR PR SG SE IL EM EM EM ­1.2 ­34.6 +9.9 ­21.2 ­21.2 NS ­4.7 +3.0 ­16.1 +11.1 ­0.1 ­1.1 ­13.7 +8.4 +0.4 +1.4 ­6.3 +7.6 ­9.3 ­10.3 +1.9 +6.5 ­3.5 ­6.0 ­14.6 +3.2 +8.2 ­9.6 ­16.6 ­17.1 +5.2 ­17.0 +14.6 +1.9 +2.2 NS +4.0 +26.8 ­4.3 +31.6 +5.8 +2.0 +2.2 +30.7 NS +5.9 +2.1 +14.1 +8.9 ­2.2 ­1.2 +26.9 +2.6 +1.1 ­7.1 NS +8.4 NS NS ­6.0 Fund Wkly % YTD % obj return return 5­yr % return EIIGblProp x ICON Fds ConsStapl PACE Funds P SmGEqtyP ICON Fds Hlthcare S PACE Funds P LgGrEq P PACE Funds P LgVEqtyP PACE Funds P SmVEqtyP Price Funds SpecGr x ICON Fds ConDisc S IronBridge Funds SmallCap Dimensional Fds US HBM GMO Trust III Quality Fidelity Selects NtGas x Direxion Fds NatRBull2X Invest Managers MLP&EnI I Invest Managers MLP&Engy Prudential Fds A LCCorEqA BlackRock A Eng&ResA Midas Funds Midas Fd t Oppenheimer A Income A Rydex Investor PrecMet Rydex Investor EnrgySer Fidelity Selects NatRes rx OCM Funds GoldInv t Ivy Funds EnergyA t Waddell & Reed Adv EnergyA t Invesco Funds A Energy p Ivy Funds GlNatRsA p Invest Managers EuroPGld A Fairholme RE SE SG HB LG LV SC XC SE SC LV LC NR SE NR NR LC NR AU NR AU NR NR AU NR NR NR NR AU XV +7.8 +7.5 +5.3 +4.5 +4.5 +4.3 +4.3 +3.8 +3.6 +3.5 +3.5 +3.4 +3.2 +3.2 +3.1 +3.0 +3.0 +3.0 +3.0 +3.0 +2.9 +2.9 +2.9 +2.9 +2.8 +2.8 +2.8 +2.8 +2.8 +2.8 5­yr % return ­46.6 ­22.3 ­20.9 ­20.1 ­15.0 ­11.4 ­11.2 ­10.1 ­10.0 ­9.9 ­8.6 ­7.7 ­7.4 ­6.7 ­6.2 ­6.1 ­5.6 ­5.5 ­5.4 ­5.2 ­5.0 ­4.9 ­4.9 ­4.6 ­4.6 ­4.6 ­4.6 ­4.6 ­4.6 ­4.6 ­48.3 ­19.4 ­23.0 ­21.6 ­12.8 ­16.9 ­14.6 ­11.2 ­9.8 ­11.6 ­13.3 ­7.5 ­40.7 ­50.6 ­41.0 ­42.1 ­7.4 ­41.1 ­29.3 ­39.3 ­31.4 ­34.0 ­23.7 ­25.9 ­25.8 ­25.5 ­31.8 ­25.0 ­28.9 ­13.2 ­6.2 +6.2 +4.3 +13.1 +8.5 +7.4 +6.2 +6.8 +11.5 +6.4 +10.1 +10.3 ­8.9 ­19.4 NS ­0.2 +10.9 ­16.7 ­33.4 ­4.3 ­25.6 ­11.5 ­5.2 ­22.1 ­4.6 ­4.5 ­8.4 ­10.5 NS +1.7 Footnotes: e: Ex capital­gains distribution. f: Previous day{rsquo}s quote. n or nl: No upfront sales charge. p: Fund assets are used to pay for distribution costs. r: redemption fee or contingent deferred sales load may apply. s: Stock dividend or split. t: Both p and r. x: Ex cash dividend. NE: Data in question. NS: Fund did not exist at the start date. NA: No information available. Key to abbreviations and footnotes: Fund objectives: AB: Long­term top­grade corporate and govern­ ment bonds. AU: Gold oriented. BL: Balanced. EI: Equity income. EM: Emerging markets. EU: European region. GL: Global (includes U.S.). GM: General municipal bond. GT: General taxable bond. HB: Health and biotech. HC: High­yield taxable bond. HM: High­yield municipal bond. IB: Intermediate­term investment­grade corporate bond. IG: Intermediate­term Treasury/government debt. IL: International (outside U.S.). IM: Intermediate­term municipal bond. LC: Large­cap core. LG: Large­cap growth. LT: Latin American. LU: Long­term Treasury/government debt. LV: Large­cap value. MC: Mid­cap core. MG: Mid­cap growth. MP: Mixed portfolio (stocks and bonds). MT: Mortgage. MV: Mid­cap value. NM: Insured municipal bond. NR: Natural resources. PR: Pacific region. SB: Short­term investment­grade corporate bond. SC: Small­cap core. SE: Sector (specific industries). SG: Small­cap growth. SM: Short­term munici­ pal debt. SP: S&P 500. SQ: Specialty diversified equity. SS: Single­ state municipal debt. SU: Short­term Treasury/government debt. SV: Small­cap value. TK: Science and technology. UN: Unclassified. UT: Utility. WB: World bond. XC: Multi­cap core. XG: Multi­cap growth. XV: Multi­cap value 5­year % return: Annualized performance over the past five years. Top 5 mutual funds by objective, year­to­date % return Emerging markets RussiaA p +4.2 NwWrldA ­7.2 TEmgMkts ­7.5 EmMktSC p ­7.8 EmergAs r ­8.3 Voya Funds Cl A American Funds A Fidelity Invest Templeton Adv Fidelity Invest YTD % return Equity income Utilities p +1.9 StrValDvIS +1.8 DivdGro +1.0 ValLdrs ­0.5 Div&Inc N ­0.9 Invesco Funds A Federated Instl Vanguard Fds Paydenfunds City Nat Rochdale Health biotech YTD % return Global GlbOppA +10.2 GlblGrth I +9.9 GblInfra I +7.9 UncnEqInv +7.1 GlblOppInv +6.5 International Oppenheimer A Oberweis Funds Wasatch Rainier Inv Mgt Oberweis Funds IntlSmCA IntlOpp Inst IntlGr INTLPEQ I IntlOpp t Large­cap core Price Funds John Hancock Fds Hartford Fds A John Hancock Fds AB Funds A YTD % return Biotch +11.1 HlthSci +11.1 Hlthcare p +10.8 HlthCr +10.5 GblHlthSci +9.4 Fidelity Selects Price Funds Hartford Fds A Vanguard Admiral Allianz Funds A Oppenheimer A WCM Focus Fds Lazard Instl Cambiar Funds Artisan Funds YTD % return US LCapC FndLgCap I CoreEqA p LgCapVal I CoreOppA p YTD % return Mid­cap core Eaton Vance I ClearBridge Dreyfus Schroder Funds Scout Funds AtlSMID MidCCore A ActMidA USSMOpIv r MidCap rx YTD % return Small­cap core MicCapV t SmCapGr Y GoldenSCC SmallCap r SmCEqInst Wasatch TouchstoneFamily Forum Funds Fidelity Invest TIAA­CREF Funds Natural resources Price Funds Fidelity Selects Tortoise Capital Fidelity Adv Foc A Columbia Class Z New Era Enrgy x SelectOpp I EnergyA px GblEnrgy Pacific region Japan Inv Korea Inv Japan Japan JpnSm Matthews Asian Matthews Asian Price Funds Dimensional Fds Fidelity Invest +7.8 +0.4 ­0.1 ­0.1 ­0.4 YTD % return Science technology +14.1 +13.9 +13.8 +13.6 +13.5 Price Funds Fidelity Selects Price Funds Jacob Funds BlackRock A YTD % return Gold oriented +6.0 +4.7 +4.7 +4.4 +3.8 US Global Investors Fidelity Selects GAMCO Funds First Eagle US Global Investors GlbTech IT Svc e MediaTl Internt Inv e SciTchOpA Gld&Mtls Gold r GoldAAA SGenGld p WldPrcMn +6.1 +0.8 +0.6 +0.3 ­1.1 YTD % return Sector Fidelity Selects TFS Funds Fidelity Selects Fidelity Selects 361 Funds Retail x HedgedFut CstHo x ConDis x GblCtrtrd I +17.6 +7.1 +4.8 +4.7 +3.2 YTD % return Balanced CapApp M&CBalN BalanA TxMBal GrTxStr Price Funds Aston Funds Eaton Vance A Vanguard Fds USAA Group YTD % return Intermediate bond ­20.4 ­22.4 ­22.4 ­22.5 ­23.1 Vanguard Admiral Dimensional Fds Western Asset Western Asset Vanguard Admiral YTD % return Long­term bond +18.5 +14.0 +13.4 +12.8 +12.3 Guggenheim Funds Parnassus Funds Bishop Street Fds Old Westbury Fds Ave Maria Funds YTD % return Long­term U.S. +18.7 +11.6 +10.6 +10.4 +9.5 Fidelity Spartan Vanguard Admiral Price Funds Sit Funds WesMark Funds YTD % return Mortgage ­8.9 ­18.8 ­19.4 ­20.3 ­20.6 Legg Mason A Victory Funds Voya Funds Cl A CRAQlInv BMO Funds ITGrAdm ITExQual CorePlus I Core I ITBdAdml TotRetBd I FxdInc HighGrdI FixedInc p BondR IntTrAdv re ITsryAdml USTInt US Gov GovBd +3.9 +2.7 +1.5 +1.3 +1.2 YTD % return +1.8 +1.6 +1.6 +1.6 +1.6 YTD % return +1.3 +0.9 +0.8 +0.7 +0.4 YTD % return +2.1 +2.0 +1.5 +1.5 +1.0 YTD % return WAMtgBkA FundFInc I GNMA A MtgeIncY +2.3 +1.9 +1.8 +1.8 +1.7 MAKES SENSE TO PAY OFF MORTGAGE Investing Scott Burns Syndicated columnist Q: My wife and I are consid­ ering pay­ ing off our mortgage and would like your opinion. I am 54. My wife is 57. Our combined income is $330,000. We have no debt other than the mort­ gage. We have about $2 mil­ lion in savings. We max out our IRAs, my 401(k) and her Thrift Savings Plan. On top of that, we put $3,500 in a Vanguard account every month. We owe $100,000 on our mortgage. Our interest deduction is about $3,300 a year and the interest rate is 3.25 percent. Our prop­ erty taxes are about $9,000 a year. We have about $100,000 in cash. We also have $33,000 in a savings account. Your thoughts? A: Unless you have un­ usual medical expenses or make significant charitable donations, it’s safe to say that your mortgage­inter­ est deduction isn’t provid­ ing you with any tax bene­ fit. In addition, the mort­ gage­payoff amount, $100,000, is small relative to both your annual in­ come and your current savings rate. It’s also tiny relative to your accumulated savings. So paying it off will increase your cash flow, have little or no effect on your tax bill, and provide you with a significant peace­of­mind dividend. Meanwhile, paying off the mortgage will provide you with an effective “yield” on your noninterest payment that is greater than the 3.05 percent yield on a 30­year U.S. Treasury bond. You have every reason to pay it off, and no reason not to. Q: My wife and I have our IRA money in a PNC Capital Directions account. With a 1.4 percent fee, they are charging more than $4,000 a year for a fund of about $315,000. My wife is in a nursing home. Paying for that means I need to do the best I can with our money. Can you suggest one or more lower­fee funds that would have the approximate balance and risk of Capital Directions? A: Capital Directions is an investment­advisory program from PNC Bank, so you are paying 1.4 per­ cent for the portfolio ad­ vice. This does not include the expenses of the mutual funds or ETFs that are used to build your portfolio. As a consequence, your total cost is higher than 1.4 per­ cent a year. If you feel comfortable with investing via the Internet and phone con­ versations, invest in a single mutual fund that is balanced and managed. Vanguard Wellington (Admiral Shares, ticker: VWENX) is a traditional balanced fund with 60 percent equities and an expense ratio of 0.18 per­ cent. That 0.18 percent would be your only cost. It has provided top returns for many years. Vanguard Wellesley (Admiral Shares, ticker: VWIAX) is a more conser­ vative balanced fund with 40 percent in equities and the same expense ratio as the Wellington fund. Morningstar rates both five stars. If you are taking more than 5 percent a year from your investments, it would probably be better to take the more conservative fund. This would save you at least 1.4 percent a year. Questions: scott@scottburns.com Copyright, 2015, Universal Press Syndicate