Dear Mr. Berko: In the past year, I’ve talked to a number of friends who opened accounts with Edward Jones and put their money in the company’s no-commission, low-cost and low-fee group of Bridge Builder mutual funds. I visited an Edward Jones office and spoke with a nice broker who helped me with the information I needed. He suggested I sell my three Franklin Templeton funds, heavy-load funds with high costs that I’ve owned for more than 10 years. He advised me to invest the $108,000 of the proceeds in four Bridge Builder funds to give me better diversification and protection. He would have me own four sectors and invest $27,000 in each for my individual retirement account. They are Bridge Builder’s Small/Mid Cap Value Fund, Small/Mid Cap Growth Fund, Large Cap Growth Fund and Municipal Bond Fund. It seems that lots of retirees and other investors are putting their money in these funds because the charges are so low. What do you think?
— J.S., Cleveland
Dear J.S.: Be careful when following the masses; often, the “m” is silent. The three Templeton funds you own are far superior investments.
Jones’ proprietary Bridge Builder funds have some of the sorriest performance records I’ve seen. If I were a Jones salesman, I’d be ashamed to show this group of funds. Each of those four funds has been managing public money for a little more than a year, and their performance stinks. The Bridge Builder Small/Mid Cap Value Fund’s (BBVSX-$9.82) six-month return from January to June was 2.37 percent, versus 3.84 percent for the Standard & Poor’s benchmark. The Small/Mid Cap Growth Fund’s (BBGSX-$9.97) six-month return during that period was 2.45 percent, versus 3.16 for the benchmark. The Large Cap Growth Fund’s (BBGLX-$10.18) six-month return was minus 1.1 percent, versus 3.27 for the benchmark. And the Municipal Bond Fund’s (BBMUX-$10.39) six-month return was 2.87 percent, versus 3.81 for the benchmark. And that salesman would have you invest $27,000 in each of these abortions just because the costs are low? Hmmph!
Jones has more than 14,000 salespeople peddling this junk, and by the end of this year, they could attract more than $23 billion from people into this Bridge Builder garbage. It seems to some observers that Jones’ salespeople must be lowering their standards, because so many other no-load and low-fee funds (Vanguard, Fidelity, T. Rowe Price, etc.) have much better records.
