Mutual Funds

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Incometrader Mutual Funds
Incometrader Fund +19.97%
S&P 500 +11.42%
Janus (JAWWX) +8.96%
Fidelity (FDGRX) +10.65%
Vanguard (VWELX) +9.42%
Buy & Sell Signals Inside
Buy Buy the SPY
Sell Sell the SPY
Hold Hold the SPY
Out Portfolio in cash

Many Investors trade mutual funds in either their regular trading account or their retirement account. So we at have decided to participate in the fund race as well. Since all mutual funds are based against the S&P 500 we too will use the S&P 500 as our benchmark. Luckily for us the S&P 500 has a tracking stock that contains a portion of all 500 hundred stocks in the S&P 500. This stock has its own ticker symbol (SPY) just as all mutual funds do and is diversified, just as mutual funds are, but it contains a few major differences that benefit the owner over the use of mutual funds.

  SPY Tracking Stock Mutual Funds
Extremely Diversified Yes Yes
Popular Trading Vehicle Yes Yes
Track the Entire Market with 1 Trade Yes Yes
Maintenance Fees No Yes
Optionable Yes No
Short Sales Yes No
Odd Lots Yes No
Trade During Market Hours  Yes No
Low Commissions and Fees Yes No
Instant Order Execution Yes No
Earn Dividends Yes No
Stop Loss Orders Allowed Yes No
Pay Someone To Manage Your Portfolio No Yes
Beat the S&P 500 Index? This is the S&P 500 Index No
Time Consuming? No No
Extremely Diversified:

Mutual funds typically carry 100 to 300 stocks in their portfolio. The SPY carries 500.

Popular Trading Vehicle:

An average mutual fund might trade 1-5 million shares per day. The SPY has an average daily volume of over 100 million shares per day.

Track the Entire Market with 1 Trade:

The SPY is a stock that tracks the Standard & Poors 500 Index. The S&P 500 Index is the benchmark for the entire market. 

Maintenance Fees:

The SPY is a stock and so all costs on the SPY are associated with your commissions for buying and selling only. Mutual funds typically carry a front and or back load and maintenance fees.


The SPY is optionable, giving us many different ways to invest.

Short Sales:

Mutual funds cannot be sold short however the SPY can. So a trader can make money in both up and down markets on the SPY. In addition, the stock is exempt from the SEC's uptick rule for short selling. The uptick rule prohibits short sales on a stock unless the prior price change on the security was to a higher price.

Odd Lots:

Unlike the SPY, some ETFs can not be traded in odd lots. An odd lot is the amount of a security that is less than the normal unit of trading for that particular security. For stocks, any transaction less than 100 shares is usually considered to be an odd lot. Since some of the funds trade around $100 per share (putting the purchase of a 100-share round lot at $10K, which is beyond the reach of many small investors).

Trading During Market Hours:

The SPY is a stock; therefore, during market hours it trades just like other stocks. Mutual funds must wait until the market is closed to tally up the funds performance.

Low Commissions and Fees:

Your only fees associated with trading the SPY come from your broker's commissions. If you trade online, commissions can be as low as $8.00 per 1000 shares vs. 400-500 dollars on mutual funds.

Instant Order Execution:

Again the SPY is a stock so it can be bought or sold and confirmed within seconds during normal market hours. SPY trades actively pre-market and post-market on various Electronic Communication Networks (ECNs). An ECN connects major brokerages and individual traders so that they can trade directly between themselves without having to go through a middleman.

Earn Dividends:

If any of the S&P 500 stocks earn a dividend, the monies are deposited into your account. Typically mutual fund dividends are used to help pay the maintenance fees on the fund. The SPY pays dividends on a semi-annual basis.

Stop Loss Orders Allowed:

Stop Loss Orders should be used with all securities and are allowed for the SPY but not on mutual funds.

Pay Someone To Manage Your Portfolio:

The majority of Mutual Funds in America have not outperformed the S&P 500 Index over the past 10 years (Source Kipplingers Magazine Jan 2001). So instead of paying a fund manager to manage your money for you, you could have just bought the S&P 500 Index and outperformed the majority of all fund managers in America. 

Beat the S&P 500 Index:

The S&P 500 SPDR (SPY) ranks right up there with the Nasdaq-100 Trust (QQQ) in both name recognition and trading activity.

Time Consuming:

With Mutual Funds you turn your cash over to a fund manager or you pick and trade yourself, in which case your time spent will be choosing which fund to trade and how long to hold. With the SPY your investment security is already picked (SPY). The charts will show you the buy and sell signals. 

In general, since most ETFs trade with specialists at the American Stock Exchange (AMEX), bid/ask spreads are fairly tight. However, only the most popular ETFs, the S&P 500 SPDR (SPY), the Nasdaq-100 Trust (QQQ) and the Dow Diamonds (DIA) consistently trade with any real liquidity on the ECNs. The SPY is easy to trade and most any online brokerage will have a self directed IRA that's easy to set up. Since the majority of mutual funds track the S&P 500 and the SPY is the S&P 500 tracking stock, we here at decided to give buy sell and signals on the stock. Our charts give buy and sell signals on the stock for our readers to trade themselves in their own IRA's or regular trading accounts. Our members can now trade the SPY vs. a different mutual fund and hopefully outperform the markets. We call it the Incometrader advantage. So far it has outperformed the market and the three largest funds in the country.