Mutual Fund: RidgeWorth Intermediate Bond
Replacement ETF: Schwab U.S. Aggregate Bond ETF
Low expenses are critical for bond funds, which have to deal with extremely low yields. So every basis point counts.
Take a look at the RidgeWorth Intermediate Bond (MUTF:IBASX). The fund yields 1.42% but charges 0.62% — in total, it has returned 3.13% for 2012. That doesn’t include a 4.75% load charge.
Investors instead could have gone with the Schwab U.S. Aggregate Bond ETF (NYSE:SCHZ) — with the same focus on intermediate-term investment-grade bonds — which has returned more than 4% despite yielding a little less at 1.3%, thanks in large part to its scant 0.05% in fees.