[quote=anonymous]

Actually, EIA's aren't credited with dividends, so it's fair to compare them to the stripped down S&P.

Actually, it's not fair to compare EIA's to the S&P without dividends.  If one invests in the S&P and doesn't reinvest the dividends, the dividends don't disappear.  The investor still gets the dividends.  They are just choosing to reinvest them elsewhere or using them to buy a new pair of shoes.

The S&P pays dividends so the dividends need to be included to have any sort of meaningful comparison.

[/quote]

YOu don't quite get it, but I'm too lazy to explain it. Since I see EIA's as CD/Bond/Fixed Annuity substitutes, I like to compare them to those rates and not the S&P. When you present them like this, you get much bigger tickets than if you present them as an alternative to equities.

Bobby, I completely get it.  I'm just saying it doesn't make sense to compare ANYTHING to the S&P without dividends.  Comparing an EIA to the S&P with dividends also doesn't make sense.

Since I see EIA's as CD/Bond/Fixed Annuity substitutes...

I completely agree with you.   I see EIA's as nothing more than fixed annuities with a different crediting method.

How do I pick my funds?  Hmmmm....lets see Ameircan funds are at the top of the list ...let's look at those.....Good enough!   Oh wait the VanKampen guy just gave me a pen....let's see those.....good enough too!  Where is that dart board?

[quote=anonymous]

Bobby, I completely get it.  I'm just saying it doesn't make sense to compare ANYTHING to the S&P without dividends.  Comparing an EIA to the S&P with dividends also doesn't make sense.

Since I see EIA's as CD/Bond/Fixed Annuity substitutes...

I completely agree with you.   I see EIA's as nothing more than fixed annuities with a different crediting method.

[/quote]

using the s&p 500 without divs is a gimmick used my the sleazy managed money people to make their sh*tty strategies look good and smooth out the effect of their fees. i wouldn't use it for anything, either.

[quote=anonymous]

Actually, EIA’s aren’t credited with dividends, so it’s fair to compare them to the stripped down S&P.

Actually, it's not fair to compare EIA's to the S&P without dividends.  If one invests in the S&P and doesn't reinvest the dividends, the dividends don't disappear. 

[quote=AllREIT] [quote=anonymous]

Actually, EIA's aren't credited with dividends, so it's fair to compare them to the stripped down S&P.

Actually, it's not fair to compare EIA's to the S&P without dividends.  If one invests in the S&P and doesn't reinvest the dividends, the dividends don't disappear. 

[/quote]

EIA's are credited based on the S&P Price Index, not the S&P Total Return Index.

So on that basis alone, a direct investment in SPY would have 1.9% annual advantage over the EIA. That is of course before the EIA's crediting caps and limited participation.

As usual, annuities are a bad investment for everyone except the broker and insurance company. As we used to say in Greenwich, 2 out of 3 ain't bad.


[/quote]

You fail to point out in your comments that both Anon and Bobby use EIAs as an alternative for FIXED investments.  Any comparison to an all-stock index doesn't make sense.

As far as your comments about annuities being bad for all except the insurance company and the broker - why is a guaranteed lifetime income a bad thing?  Why is guaranteeing zero loss of principal a bad thing? 

For all the good things you post, Allreit, you seem to have a nasty habit of painting others with a broad brush.  Come to think of it, you sound like another so-called "expert" - a Ms. Suzy Ormon.

FTR - I've sold exactly three annuities in my life - when it was needed and was appropriate.  Please don't think I'm "all annuity all the time".

NotREIT is just a polack.

Shut your gaping mouth hole, little dick.

deekay,

Good post.  For fair disclosure, I do believe that EIAs should be compared to fixed investments because that is what they are.  I think that they are often sold in a shady manner, but this doesn't make them bad products, but it does mean that there are some bad EIA salesmen (like any other product).  I do not use EIAs in my practice.  I do a small amount of fixed annuity business and about 10% (depending on the year) of my equity business is VA's.

[quote=crashcourse]Shut your gaping mouth hole, little dick. [/quote]

You're use of the word "gaping" reminds me of a story about your mom.....

She said, " Bobby, VLP,  short man, very little penis, very big mouth." Bobby VLP. Thanks for clarifying how I know.

Shut your gaping mouth hole, little dick.

[quote=crashcourse]

She said, " Bobby, VLP,  short man, very little penis, very big mouth." Bobby VLP. Thanks for clarifying how I know.

Shut your gaping mouth hole, little dick.

[/quote]

Did she mention that I was just one in a long line of black men?

Mom's color blind. She said, " His penis is very small, he's short, and apparently he is happiest (smiles) when he is typing his computer."

The way I pick funds ... is to use UITs!  Why?  Many funds have fairly high cash positions while UITs are virtually "all in."  Most investors presume a stock fund is invested in, well, stocks ... and not such a high percentage of cash equivalents.  The added equity exposure makes a big difference. 

Also, since many UITs are assembled through rigorous rules-based quantitative screening and selection methods, the vulnerability of human emotion in the buying and selling process is absent. 

Think of UITs this way:  Screen to identify the very best seeds to plant.  Plant them and let them grow for 15 months (or whatever the term), then harvest the crop and repeat the process. 

I present two alternatives -- classic asset allocation and strategy investing.  One can meticulously assemble a great mix of asset classes from around the world using individual securities or funds from one or more families ... or one can employ back-tested UIT strategies that have consistently and substantially beaten the averages over all the benchmark periods irrespective of asset class weightings. 

Do yourself a favor and explore the First Trust and Van Kampen web sites and look at the methodology and performance of their Target and Alpha strategies, respectively.  Amazing stuff!

[quote=FL Broker]The way I pick funds … is to use UITs! 
Why?  Many funds have fairly high cash positions while UITs are
virtually “all in.”  Most investors presume a stock fund is
invested in, well, stocks … and not such a high percentage of cash
equivalents.  The added equity exposure makes a big
difference.  [QUOTE]

Why not use ETF's? They are cheaper than UITs

[quote]Also, since many UITs are assembled through rigorous rules-based quantitative screening and selection methods, the vulnerability of human emotion in the buying and selling process is absent. [quote]

How about the extremely human tendancy to data mine (back test) for interesting patterns in though random data?

[quote]Think of UITs this way:  Screen to identify the very best seeds to plant.  Plant them and let them grow for 15 months (or whatever the term), then harvest the crop and repeat the process.[quote]

While collecting extra rent at each harvest, for a total lifetime cost far in excess of A-shares.

[quote]Do yourself a favor and explore the First Trust and Van Kampen web sites and look at the methodology and performance of their Target and Alpha strategies, respectively.  Amazing stuff![/quote]

[quote=AllREIT][quote=FL Broker]The way I pick funds … is to use UITs!  Why?  Many funds have fairly high cash positions while UITs are virtually “all in.”  Most investors presume a stock fund is invested in, well, stocks … and not such a high percentage of cash equivalents.  The added equity exposure makes a big difference.  [QUOTE]

Why not use ETF's? They are cheaper than UITs

[quote]Also, since many UITs are assembled through rigorous rules-based quantitative screening and selection methods, the vulnerability of human emotion in the buying and selling process is absent. [quote]

How about the extremely human tendancy to data mine (back test) for interesting patterns in though random data?

[quote]Think of UITs this way:  Screen to identify the very best seeds to plant.  Plant them and let them grow for 15 months (or whatever the term), then harvest the crop and repeat the process.[quote]

While collecting extra rent at each harvest, for a total lifetime cost far in excess of A-shares.

[quote]Do yourself a favor and explore the First Trust and Van Kampen web sites and look at the methodology and performance of their Target and Alpha strategies, respectively.  Amazing stuff![/quote]

If UIT strategies are so good, why arent UIT's more common and popular?
[/quote]

They are. How do you think I've made so much money in my VA's? Mutual funds?

If UIT strategies are so good, why arent UIT's more common and popular?

I use them often.  The answer to your question is that they aren't very tax efficient and they aren't appropriate for monthly investments.   I like using them for lump sums in rollovers.

Why aren't UITs more common and popular?  For all intents and purposes, there are just three providers of UITs (First Trust, Claymore and Van Kampen) versus hundreds of mutual fund families.  Since UITs are broker-sold, you also don't see them advertised or talked about in the media.  (Why should glowing articles be written about them in the do-it-yourself magazines if the DIYers can't buy them and the sponsors won't advertise in the magazine anyway?) 

In my view, UITs are becoming increasing popular among brokers not only because of the well-thought-out strategies that have allowed investors to way outperform the major averages with substantially higher Sharpe ratios, but also because of their transparency (which allows investors to know precisely what they own). 

As for taxes, investors pay tax only on the gains they've actually realized when a trust terminmates.  Except for any short-term gains off of dividend reinvestments, all gains (by design) are long term (if the trust is held to maturity).  If you want to get into the market later in the year and choose to invest in a mutual fund, you could very well "inherit" capital gains that the fund realized long before you owned it.  Most people who are paying taxes anyway would prefer to pay them on larger gains rather than on smaller gains since, in the end, their net will be higher.  "Through the end of 2006, this American Fund has had an average annual return of 8% over the past five years, which includes the post 9-11 recession year of 2002, and 11% over the past 10 years.  This UIT strategy has averaged 16% over the same 5-year period and 21% over the same 10-year period.  They're both wonderful investments.  Which one would you like to take a closer look at, Mr. Jones?"  If it's true that people like to make easy decisions, guess how this scenario turns out every time?

As for not being "appropriate" for monthly investments, maybe the better word is "convenient."  Minimums are as low as $250 for qualified money (Claymore), although small tickets may not get you paid. 

FWIW, I use a combination of funds and UITs with managed ETF programs and/or annuities to build strategy and management diversification into my larger portfolios.

[quote=FL Broker] Since UITs are broker-sold, you also don’t see them
advertised or talked about in the media.  (Why should glowing
articles be written about them in the do-it-yourself magazines if the
DIYers can’t buy them and the sponsors won’t advertise in the magazine
anyway?)  [/quote]

Even if you had just one UIT sponsor, it wouldn't preclude them from advertising.

The funds sponsors also advertise extensively for themselves and mutual funds in various "Money" type magazines.

[quote]In my view, UITs are becoming increasing popular among brokers not only because of the well-thought-out strategies that have allowed investors to way outperform the major averages with substantially higher Sharpe ratios, but also because of their transparency (which allows investors to know precisely what they own).[/quote]

You need to learn about the issues of backtesting and data mining.  Investing based on trackrecords is like driving while only looking at the rear view mirror. It can be very dangerious at times.

As for the main reason UIT's aren't more common, it has to do with the TCO being higher than the cost of equivalent A-shares. Constantly rolling UIT's is going to cost the client alot more than a single hit with A-shares.

If the underlying strategies were so good, why arent they more popular? With a little effort anyone could replicate them.

There is a reason why UIT's are not a popular form of investment. With only a few sponsors and few users.

[quote]This UIT strategy has averaged 16% over the same 5-year period and 21% over the same 10-year period.  They're both wonderful investments.  Which one would you like to take a closer look at, Mr. Jones?"  If it's true that people like to make easy decisions, guess how this scenario turns out every time?[/quote]

And then comes the issue of past performance/future results. As I remind clients, you can't eat past performance if you weren't part of it.

The question is what is going to happen after you buy the UIT, not what happened when you didn't own it.

[quote]FWIW, I use a combination of funds and UITs with managed ETF programs and/or annuities to build strategy and management diversification into my larger portfolios.[/quote]

Even if you had just one UIT sponsor, it wouldn't preclude them from advertising.

The funds sponsors also advertise extensively for themselves and mutual funds in various "Money" type magazines.

If brokers are selling the product, why pay for advertisements?  Not advertising seems to work for American Funds.

As for the main reason UIT's aren't more common, it has to do with the TCO being higher than the cost of equivalent A-shares. Constantly rolling UIT's is going to cost the client alot more than a single hit with A-shares.

The cost is higher, but that's not the reason.  If it was, then nobody would be in a fee-based account since fees are more expensive than an "A" share account.

If UITs are so good, why not use only UITs?

I hope that this isn't a serious question.  Like all investments, sometimes they are appropriate.  Sometimes, they aren't.