The Mutual Fund Store
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they’re probably thinking “hey, we actually use mutual funds in taxable accounts, so what’s the difference?”
Jones actually has tax-efficient models and index/ETF models that are more appropriate for NQ accounts. And the strategy of their re-balancing process is to AVOID rebalancing frequently. They estimate that based on their rules, they would rebalance approximately every 18 months. They don’t have any rule about re-balancing every X months or whatever.
So there was actually a great deal of thought put into NQ accounts and the tax effect. For people in major tax situations (highly comped, bus owners, etc.), SMA's may be more appropriate.no doubt they’ve come a long way. There’s still a HUGE incentive to choose to be paid this month, however, so every NQ Jones statement I have ever seen has Am Fds in it or something similar. Not what Ice mentioned, unfortunately for the client.
Well since the program has been in place for like 4 months companywide, I woudn’t expect you to see any Advisory Accounts yet.
we're talking NQ right now:
http://quicktake.morningstar.com/fundnet/Tax.aspx?Country=USA&Symbol=CAIBX&t1=1229117362just for fun: CAIBX iis really four classes (7% cash, 43% Intl, 20% Value and 30% bonds). My previous post showed the 3 year return of -2.63. Then there are taxes.
If INSTEAD you bought four cheap indexes in same proportion, which I just ran the #s on, your 3 year return would be -2.8. The Std Dev would be 2 points LESS. The taxes would be lower. Moral? CAIBX's returns are based on the Asset class %'s, not picking great securities. Might as well be tax-efficient since the rest is so similar.New, you can twist numbers how you want. Right now, 3 year (and even 5 year) numbers are sort of irrelevant because of 2008. Look at the long-term picture. And I am not arguing for CAIBX. I was just using that as an example because that was the ticker you threw out there in your comment.
However, for NQ funds, I agree. I would not necessarily use CAIBX (although I like their rising dividend history, which you can’t replicate with any index). So if income over the long term is important, this is a great fund.
ok- but I used 3 years since the allocations could change more long term. also, I would argue it IS relevant as long as both comparison scenarios use the same time frame. Anyway, prospects find it VERY relevant. All this time, they thought they were paying taxes on their mutual funds because of increasing total returns. Now to pay them for two years running as the balances go down…of course, their FA did not make this a discussion point.
Bottom line: in a NQ account there is no American Funds fund that beats the same allocation of indexes (cash, Intl, LC Value, Agg bonds) thru ETFs (after taxes). Rising dividends are nice, but CAIBX dividends are not always Qualified for lower taxes either. So by separating out the classes thru ETFs, you can slice off the bond div that do not qualify and put them in the IRA.Yeah 3 year numbers are crap…You need a time period that shows rises falls and recoveries to accurately depict how something will do.
Also I think there are multiple ways to get to the top of the mountain(are out of a burning house). I use ETFs for part of the portfolio(but they are actively traded by a 3rd party) and I use individual stocks for part of a portfolio and I use UITs for part of a portfolio and I use mutual funds(not american, though I don’t think they are bad) for a small portion and alternative assets for a small portion
ETS aren’t the best, American Funds aren’t the best, but I think you can combine a couple of strategies to create something better than the single choice.
Back to the original topic of this thread. How timely!
I just finished visiting with an officer of the bank I work at about his wife's 403(b). Guess where he said she'd like to move it to. The Mutual Fund Store! RUFKM! He said that he likes the fact that it is actively managed. Now I can do pretty much anything I want through my b/d. If I want I have access to the same type of platform, I let him know that, except that I'm the guy (you know, the one that HE is supposed to be helping bring assets TO) that will be overseeing the account. We'll see how it turns out but my point was that The Mutual Fund Store, say what you will, is very good at marketing. Guess I'll be tuning in to the radio show to hear how he does it.If the guy who is supposed to be bringing you clients is discussing moving his wife's assets to someone other than you, I think I might be looking for a different bank.
I think it's the same mentality with Cramer or any of the other talking heads on the financial pornography channels. People hear them on the radio or watch them on TV and assume that they're financial geniuses. They will then blindly follow them wherever. I'd ask them what they think actively managed really means. His marketing plan is simple. Host radio show, say a few witty and intelligent sounding things, staff offices around the country with knuckleheads who can fill out a questionairre and answer the phone, and sign up new clients. Rinse, lather, repeat. You can find clips of his shows on his website. You'll find that he doesn't really say anything brilliant. He shows he can read the morningstar snapshots quickly and think on his feet. But I think you'll be somewhat suprised at what little he shares with his callers that you don't already know. Maybe I should figure out how to host my own radio show. I can say stupid things like he does all day long.I think it also shows how emotion rules the day. He's had money with me, it's down. "Oh but this wonderful gentleman on the radio has the magical solution. He's on the radio so it must be true."
He also threw out another one I've seen somewhere on the site. "I haven't ever made any money in the stock market." Really? no money what-so-ever? BS! Then he goes on, because he thinks he's really smart, we'll it's all paper gains until I sell, so no I've never made any money. I beg someone! Stop the insanity!I’ll give you some cannon fodder for him. Sitting on my desk right now are the statements for a couple I’ve been working on for a few months. They are current Mutual Fund Store clients. They only hear from their advisor when they call him. They get no service from him other than statements and returned phone calls. Here’s what their statements show:
His says 1/1/08 - $244,124 10/31/03 - $159,430 Hers says +$145,325 + $95,254 _________ ________ $389,449 $254,684 - $254,684 _________ $134,765/$389,449=.346 or 34.6% down through the end of October. At that point the S&P was down 33.05%. So, the MFS had come close to mirroring the S&P with the fees factored in. Tell your guy that if he expects better performance than that, he's going to have to look for a different advisor. PM me if you want the current fund lineup in the portfolio I have on my desk.So you have no client accounts down 33.05% including fees? No lehman bonds, no GMAC or GM or Ford bonds?
Just went to MFS website and listened to a couple of his fund recommendations. Correct me if I’m missing something. They are no-load and load waived for sure but many have high expense ratio’s. If you couple that with the .375% to .225% quarterly fee (1.50% - .90% annually) that could be a very expensive way to own these mutual funds. He recommended to hold Kinetics Paradigm, Morningstar has that at 1.68% expense ratio, add in say the max of 1.50% mgt you get a 3.18% total expense! That CANNOT possibly be right. Anyone have any insight? I’m sure I’m missing the obvious.
Nope that’s pretty much it. The prospectus states the annual fees and I don’t know that anyone can barter with them on it.
But your folks are hearing that they shouldn't ever pay a broker a commission. He buys no load and load waived funds. That's obviously better than the commission approach. He's just telling them what they want to believe is true. spears - yes I do have some clients that own some of those bonds. And I do have clients who's portfolios are down more than 33%. However, for the ones where it mattered, I used a VA to protect their income stream. The majority of those we started in 2007. Most of my clients who own LEH or GMAC bonds aren't down more than 25%, including their LEH and GMAC bonds. Those people I mentioned in that earlier post didn't take my original advice in August, which was to leave the goobers at the MFS and move the money with me into a VA with an income guarantee. The husband couldn't see the sense in paying a commission to buy an annuity with the market going down. The wife was all for it. Well, had we done that we'd have moved about $300K into the VA. I would have done the 6 month DCA starting in Aug. So they would have missed the big drops in Sept and Oct with the biggest bulk of the money. Instead of being down 35% now, they'd be down less than 10%. The MFS might be fine if the only thing you want someone to do is place trades in funds for you. But if you want more than that, you need to look elsewhere.[quote=Spaceman Spiff] Those people I mentioned in that earlier post didn’t take my original advice in August, which was to leave the goobers at the MFS and move the money with me into a VA with an income guarantee. The husband couldn’t see the sense in paying a commission to buy an annuity with the market going down. The wife was all for it. Well, had we done that we’d have moved about $300K into the VA. I would have done the 6 month DCA starting in Aug. So they would have missed the big drops in Sept and Oct with the biggest bulk of the money. Instead of being down 35% now, they’d be down less than 10%.
[/quote] Don't you just hate those kind of people...you know, the ones that don't take your advice because they think they are smarter than us?