Posts filed under “Mutual Funds”

The Mutual Fund Swap

This was written by Kris Venne, the Certified Financial Planner in our Asset Management group:


Its 3:35pm on a Wed., your phone rings – it is your “advisor” over at MerFargonley. Conspicuously its pretty close to month end, say March 24th.

“Hey Mike! Hows it going? How’s Sandy (your wife)? How about little Mikey?”

Once you get through some of these oddly uncomfortable pleasantries, here it is, the reason for the call:

“So I was looking at your IRA account, and that social media UIT we got into (The friend  opportunities fund) comes due in a few weeks here and I wanted to talk to you about getting you out of it and into this emerging market dividends mutual fund.”

There is enough going on here for me to talk to you about that it does not even matter what happens the rest of the conversation.

First of all, the 1 year UIT that this  got you into came with a 3.25% upfront “sellers concession.” It was introduced to your “advisor” by a wholesaler who supplied his office with a free lunch and a 15 minute presentation. (It was baked zitti, salad, and a cookie tray – wasn’t great but who complains about lunch that just arrives in your office at 11:45?)

This wholesaler covers your “guys” territory, he travels back and forth across your state hitting brokerage offices along the way.

That particular day your “advisor” was pretty enticed by how good a social media fund sounded, the slides with pictures of grandparents logging into Facebook really was what did it for him. “This will be so easy to sell to my clients” he thought to himself “especially….[you].” So he told you to sell what remained of your Growth Fund of America for this UIT, ostensibly containing the next Apple. He took home an extra couple of thousand dollars in gross sales that month, and you dreamed of your next statement. So here you are, a year later, faced with the option of having him roll it into the updated version of the UIT (your “guy” would only earn about 1% on this “rollover”, not as exciting as what is coming next).

This new fund earns him a cool 5.75% of what is left. How can he do this you say? Because his compliance officer is not really going to bat an eye because he is not taking you from one 5.75% mutual fund to another, instead it is a totally different product he is switching you out of.

Awesome, you are that much closer to being ready for your golden retirement now!

This sort of crap goes on every single day, all day, across this country . . .

Category: Investing, Mutual Funds, Really, really bad calls

Skill vs Cost: The Myth of the Successful Money Manager

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managed funds

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Category: Digital Media, Hedge Funds, Mutual Funds

Shorter WSJ: Beware Target Date Funds

Missing the Target Source: WSJ   You may have missed the WSJ’s takedown on Target-date funds this weekend. Its a must. The idea of target date funds are a form of auto-pilot that automatically shifts allocations into more bonds less stocks as the investor ages. Target date funds now manage about $550 billion dollars. The…Read More

Category: 401(k), Investing, Mutual Funds

Investors Continue to Pick ETFs over Active Funds

Source:   This was part of theme of my presentation this week — while equity markets in general have seen huge outflows, ETFs in general — and Vanguard in particular — have seen large inflows .  . .    

Category: ETFs, Investing, Mutual Funds

Finding Mutual Fund Managers Who Beat the Market

Yesterday, I referenced Merrill Lynch research that showed only 39% of fund managers beat the S&P500 last year. This morning, the WSJ references Goldman Sachs research — it shows something similar. Their data showed 65% of U.S. large-cap stock funds trailed the benchmark index net of fees. (5 year average = 66%). When they looked…Read More

Category: Investing, Mutual Funds

39% of Fund Managers Beat the S&P in 2012

  Here is an astonishing fact brought to my attention from the quant group at Merrill: “In 2012, 39% of managers beat the S&P 500. Value and Core managers achieved 21% and 38% success rates, respectively. 54% of Growth managers outperformed the benchmark.” 38% is an unusual data point — Value did not work, Core…Read More

Category: Investing, Mutual Funds

How Fund Managers Vote on Pay

How fund managers voted on pay (Financial News) This is how 20 of the UK’s biggest fund managers voted on executive pay during early 2012′s “shareholder spring”. It’s no surprise to see firms like the Co-op racking up the ‘no’ votes here, but other serial rebels, such as State Street Global Advisers, have kept a…Read More

Category: Mutual Funds, Think Tank

What’s Your Biggest Fund Investing Error?

The WSJ asked an interesting question of its readers recently:   Hat tip Dorsey Wright

Category: Mutual Funds, Psychology

Mutual Funds and Managers to Avoid

The mutual funds and managers to avoid Barry Ritholtz Washington Post, May 4 2012         How are your retirement investments doing these days? For many people, that’s a loaded question. U.S. markets are up more than 100 percent from their 2009 lows, yet many investors are not thrilled by their returns. That’s quite…Read More

Category: Apprenticed Investor, Mutual Funds