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If I wanted an eq-weighted fund, I'd go with BRLIX - .15 ER and simply takes the top 35 largest companies[1], equal-weights them, and rebalances a few times a year. Easy cheap exposure to large value/growth firms.
[1] Except Facebook, which I don't think they like ... and I can agree with that.
@Old_Skeet:You mentioned> Also, know that, I am most happy with my arrangement as I can do nav exchanges from one fund to another (within the same family of funds) through a nav exchange program at no direct expense to me. I take this to be in a tax deferred account ? Have a pleasant Sunday, Derf
@Derf: Thanks for making comment. Yes, your are correct, there would be no dircect taxation for capital gains that took place inside my traditional ira account; but, these gains would be in my taxable in my account. This comment was directed towards expenses associated with the investments themselves by the broker and fund companies; and, not for taxation on them by government.
Again, I have no wrap fees on either my mutual fund consolidated account or my self directed ira account.
Where to start? Catch 22: When you don't know much, you have no idea if your broker (or even your financial adviser) is good, when you get better you don't need an adviser. Brokers are not Fiduciaries. I would not use a FA(financial adviser) Fiduciary either. Remember, a FA is a jack of all trades master of none. A FA can give advice after just several months of passing 2-3 courses(I did it in 3 months but never practiced). If you need a tax advice use a CPA. If you want to set up a will, power of Attorney, a trust you want an attorney. Think how many years it took to become a CPA or an attorney. One of the most important myth for a FA is to put their clients' interest first but if they do that they will starve. A good FA needs about 2-3 hours to set up a typical client (I can do it under an hour). This setup should be good for several years unless something drastic changed. This means, you should pay a $1000 every several years but the reality is a typical FA wants to have a long-term relationship with you (I'm already married ) so they can charge you based on your portfolio size. Why would I pay someone according to portfolio size and not by the hour or the job? Please run. That's how a CPA works and they are real experts.
Here is an easy way to see why your broker has his interest first, send him an email (because you want to see it in writing) and ask him what is the commission to buy 100 shares of AAPL, 500 shares and 1000 shares. Please report back(Hint: it's only $4.95 regardless at Fidelity + Schwab).
Lastly, if you walk in the street and see a broker please cross the street asap, if you see a FA say hi and keep walking
@rfrono: The Brideway fund BRLIX is indeed a fine no load fund.
For me to hold it though I'd have to open a wrap fee based account. I'll call this the new school way. In talking with my broker sometime ago this could be done. The wrap fee was based upon a sliding scale determined by the total value of the assets held within the account. Because of the amount of money I'd have invested in this fee based (new school) account makes it unattractive from my perspective. Here is why. Even with the low expense ratio for the fund BRLIX at 0.15% when you add the account wrap fee could push the cost close to 1.4% and perhaps more. This is based upon the account wrap fee being set at the low range of 1.25%.
For me, I felt the old school way was the best way to continue to invest and thus far I have stayed away from fee based accounts.
Hi @JoJo26: Now that I steped forward and responded to your question(s) ... How about you steping forward and detiling your expenses associated with your portfolio and positions held along with telling us how you invest. I'll make this an open ended question so feel free to respond accordingly. I'll be interested in hearing how your new school way compares to the old school way.
You missed the response to my question about the total fees. You gave a round about answer that did not ultimately explain explain how much you're paying (you gave an an approximate, fund blended ER, but did not consider what you're paying to your broker. That is a very important figure in the grand scheme of things.
My blended ER is less than 70 bps. I run everything independently via Fidelity. The core of my portfolio passive equity exposure as it's my belief that active manager add little value in most market segment. The active funds I do hold are FMIMX, GPEOX, TCMPX and QUSOX.
My blended ER is less than 70 bps. I run everything independently via Fidelity. The core of my portfolio passive equity exposure as it's my belief that active manager add little value in most market segment.
@JoJo26, well done with your overall ER with other advisor fees! Over time, these fees really add up quickly. There are more ETFs and actively managed ETFs with NO trading commission at large brokerages (Fidelity and Schwab) available today. Vanguard is working hard to catch up in this offering.
My blended ER is less than 70 bps. I run everything independently via Fidelity. The core of my portfolio passive equity exposure as it's my belief that active manager add little value in most market segment.
@JoJo26, well done with your overall ER with other advisor fees! Over time, these fees really add up quickly. There are more ETFs and actively managed ETFs with NO trading commission at large brokerages (Fidelity and Schwab) available today. Vanguard is working hard to catch up in this offering.
I would also note that I will never pay a load as this dig a deep hole to recover from. Most active managers fail to outperform after their regular fees. Imagine starting in the hole 5%.
I may pay some commissions on ETFs, but that's rare and deminimis. Today, all of my ETF exposure is via ETFs that I've purchased commission-free.
American Funds typically have ERs of about 70 basis points. If you can purchase those funds at NAV (no load) they are frequently a pretty good deal. American Funds does not use "star fund managers", but has long employed an investment committee approach, which I prefer for stability. For example, I have no interest in depending on "bond kings" to not lose their "golden touch", their wives, or their bloody minds.
As far as American Funds being an "asset accumulator" (whatever that means) I couldn't care less.
American Funds typically have ERs of about 70 basis points. If you can purchase those funds at NAV (no load) they are frequently a pretty good deal. American Funds does not use "star fund managers", but has long employed an investment committee approach, which I prefer for stability. For example, I have no interest in depending on "bond kings" to not lose their "golden touch", their wives, or their bloody minds.
As far as American Funds being an "asset accumulator" (whatever that means) I couldn't care less.
1) AF is an asset gatherer and historically has not shown a willingness to control growth. The platform is simply trying to take in assets to increase dollars earned from management fees. May not matter to some, but is a big deal to me. You could say, AF is a mega shop that invests in mega caps, generally (I know there are AF that invest down the cap spectrum). Well then I'd say, might as well index for a few bps rather than pay active fees.
2) While AF has multiple PMs for each fund it manages, it IS NOT, IMO, an investment committee approach. Each PM has a sleeve of capital that he/she has discretion over so they are effectively "star" managers, but just operating without a construct that provides diversification. The PMs are not collaborating to come to a single investment decision. I don't think many retail investors know this is actually how AF manages its funds.
You are correct in your description of the AF management approach, with different entities looking at different "sleeves". That's not really a "committee", as you rightly observe. However, if you actually look at the list of the various names of these Portfolio Managers, it's apparent that it is hardly a so-called "star system" either. That said, their management style has worked just fine for us.
A significant portion of our AF assets are in IRA accounts. AF considers the total of all account assets, IRA or other, in the determination of their load schedule, which helps greatly in achieving no-load status. Additionally, some load funds also impose a load on shares purchased through dividend reinvestment. American Funds did not do that- all dividend reinvestment was always at NAV. Additionally, if one sold a fund, transferring the proceeds to their MMKT fund, and then later redeployed those proceeds for a fund purchase there was no load on that purchase either. These details are quite important in comparing one "load fund" company against another.
Indexing was not an option in the years when we were building the majority of our asset base. I do use some indexing with our Schwab account, which was established for additional asset flexibility well after that major part of our asset building was accomplished.
My blended ER is less than 70 bps. I run everything independently via Fidelity. The core of my portfolio passive equity exposure as it's my belief that active manager add little value in most market segment.
JoJo26, well done with your overall ER with other advisor fees! Over time, these fees really add up quickly. There are more ETFs and actively managed ETFs with NO trading commission at large brokerages (Fidelity and Schwab) available today. Vanguard is working hard to catch up in this offering.
My blended ER is also less than 70 bps. I run everything independently via a variety of channels (including direct, brokerages, insurance companies, banks). The core, in fact all of my current portfolio is actively invested, whether equity or fixed income.
As OJ wrote, if you like American Funds, and if you have enough invested with them, you can construct a substantially different type of actively managed portfolio than mine and not have to scurry from channel to channel. No broker fees, no loads, low cost.
If you want to work at it, it may be possible (without using a 401k) to buy R5 shares for some American Funds at an "all in" cost that's lower than A shares (or F-1 shares) cost. Though sometimes saving a just few bucks may not seem worth the effort. Especially if it takes a long term commitment to pay off.
Nevertheless, that's how you shave a quarter percent off of TCMPX (TCMIX avail at Fidelity and Vanguard with a $25K min + TF in IRAs); that's how you cut a few basis points off FMIMX (FMIUX avail at Fidelity with a $2500 min + TF in IRAs), and how you save a whopping 37 bps on QUSOX (QUSIX at Fidelity w/$2500 min + TF in IRAs).
I don't know what "Vanguard is working hard to catch up in this offering" means (ETFs?). Vanguard is the second largest sponsor of ETFs. Schwab and Fidelity are pumping out PR about selling 500 ETFs without fees, while Vanguard offers about 1800 ETFs without TFs.
My blended ER is less than 70 bps. I run everything independently via Fidelity. The core of my portfolio passive equity exposure as it's my belief that active manager add little value in most market segment.
JoJo26, well done with your overall ER with other advisor fees! Over time, these fees really add up quickly. There are more ETFs and actively managed ETFs with NO trading commission at large brokerages (Fidelity and Schwab) available today. Vanguard is working hard to catch up in this offering.
My blended ER is also less than 70 bps. I run everything independently via a variety of channels (including direct, brokerages, insurance companies, banks). The core, in fact all of my current portfolio is actively invested, whether equity or fixed income.
As OJ wrote, if you like American Funds, and if you have enough invested with them, you can construct a substantially different type of actively managed portfolio than mine and not have to scurry from channel to channel. No broker fees, no loads, low cost.
If you want to work at it, it may be possible (without using a 401k) to buy R5 shares for some American Funds at an "all in" cost that's lower than A shares (or F-1 shares) cost. Though sometimes saving a just few bucks may not seem worth the effort. Especially if it takes a long term commitment to pay off.
Nevertheless, that's how you shave a quarter percent off of TCMPX (TCMIX avail at Fidelity and Vanguard with a $25K min + TF in IRAs); that's how you cut a few basis points off FMIMX (FMIUX avail at Fidelity with a $2500 min + TF in IRAs), and how you save a whopping 37 bps on QUSOX (QUSIX at Fidelity w/$2500 min + TF in IRAs).
I don't know what "Vanguard is working hard to catch up in this offering" means (ETFs?). Vanguard is the second largest sponsor of ETFs. Schwab and Fidelity are pumping out PR about selling 500 ETFs without fees, while Vanguard offers about 1800 ETFs without TFs.
May I ask what actively managed funds you're using to to have a total blend of less than 70 bps when they're all active.
I don’t know what funds @msf might own. But I do know it isn’t hard to put together a pretty well diversified actively managed fund portfolio with an average ER well under that .70% ER figure. I own some D&C myself. Have listed their 6 funds and their ERs below.
Solid house. Great for really long term investors.
Dodge & Cox International DODFX .63 Dodge & Cox Global. DODWX .63 Dodge & Cox Stock DODGX .52 Dodge & Cox Balanced DODBX .53 Dodge & Cox Global Bond DODLX .45 Dodge & Cox Income DODIX .43
One area in which I'm in agreement with @MJG is that I don't publish my portfolio. How I invest may be totally wrong for someone else. My investments are spread over a wide variety of families, though some of my largest holdings by family include Vanguard, T. Rowe Price, DFA, Harbor, Lazard, American Funds. Institutional class shares when I can get them.
Most of those families tend to run in the 0.60% to 0.90% ER range. Vanguard and DFA of course are much lower, and since Vanguard is my largest fund family by weight, those funds pull my average ER comfortably below 0.7%. @hank pointed this out also.
I've got real (i.e. more than placeholder) positions in only a couple of funds costing substantially more than 1%. Small cap int'l - hard to hold that down, and a mid cap fund (but that one's still just a small part of my portfolio).
The key to keeping one's ER low is not to go wild with funds costing over 1%. If you do that and make liberal use of low cost families, you'll have a modest cost portfolio.
Sadly, my bond funds don't do much to improve my average ER. While vanilla bond funds (including my vanilla core fund) can be found easily for around 0.45% (see, e.g. DODIX above), multisector and some other categories of bond funds tend to run higher.
Here’s a well diversified equity fund from T. Rowe Price: T. Rowe Price Spectrum Growth Fund PRSGX (.78% ER). I love this one - but don’t think I’ve ever owned it. While termed a domestic equity fund, it’s currently got 35% invested in foreign stocks. Very well diversified among a dozen or more Price’s actively managed funds.
Alright - it’s slightly over that .70 figure, but blend it with a 25% slug of their Inflation Protected Bond Fund PRIPX (ER .41) and you’re under below the .70 figure.
Comments
If I wanted an eq-weighted fund, I'd go with BRLIX - .15 ER and simply takes the top 35 largest companies[1], equal-weights them, and rebalances a few times a year. Easy cheap exposure to large value/growth firms.
[1] Except Facebook, which I don't think they like ... and I can agree with that.
I take this to be in a tax deferred account ?
Have a pleasant Sunday, Derf
Again, I have no wrap fees on either my mutual fund consolidated account or my self directed ira account.
Catch 22: When you don't know much, you have no idea if your broker (or even your financial adviser) is good, when you get better you don't need an adviser.
Brokers are not Fiduciaries. I would not use a FA(financial adviser) Fiduciary either.
Remember, a FA is a jack of all trades master of none. A FA can give advice after just several months of passing 2-3 courses(I did it in 3 months but never practiced). If you need a tax advice use a CPA. If you want to set up a will, power of Attorney, a trust you want an attorney. Think how many years it took to become a CPA or an attorney.
One of the most important myth for a FA is to put their clients' interest first but if they do that they will starve. A good FA needs about 2-3 hours to set up a typical client (I can do it under an hour). This setup should be good for several years unless something drastic changed. This means, you should pay a $1000 every several years but the reality is a typical FA wants to have a long-term relationship with you (I'm already married
Here is an easy way to see why your broker has his interest first, send him an email (because you want to see it in writing) and ask him what is the commission to buy 100 shares of AAPL, 500 shares and 1000 shares. Please report back(Hint: it's only $4.95 regardless at Fidelity + Schwab).
Lastly, if you walk in the street and see a broker please cross the street asap, if you see a FA say hi and keep walking
For me to hold it though I'd have to open a wrap fee based account. I'll call this the new school way. In talking with my broker sometime ago this could be done. The wrap fee was based upon a sliding scale determined by the total value of the assets held within the account. Because of the amount of money I'd have invested in this fee based (new school) account makes it unattractive from my perspective. Here is why. Even with the low expense ratio for the fund BRLIX at 0.15% when you add the account wrap fee could push the cost close to 1.4% and perhaps more. This is based upon the account wrap fee being set at the low range of 1.25%.
For me, I felt the old school way was the best way to continue to invest and thus far I have stayed away from fee based accounts.
Thanks again for making comment.
My blended ER is less than 70 bps. I run everything independently via Fidelity. The core of my portfolio passive equity exposure as it's my belief that active manager add little value in most market segment. The active funds I do hold are FMIMX, GPEOX, TCMPX and QUSOX.
I may pay some commissions on ETFs, but that's rare and deminimis. Today, all of my ETF exposure is via ETFs that I've purchased commission-free.
As far as American Funds being an "asset accumulator" (whatever that means) I couldn't care less.
1) AF is an asset gatherer and historically has not shown a willingness to control growth. The platform is simply trying to take in assets to increase dollars earned from management fees. May not matter to some, but is a big deal to me. You could say, AF is a mega shop that invests in mega caps, generally (I know there are AF that invest down the cap spectrum). Well then I'd say, might as well index for a few bps rather than pay active fees.
2) While AF has multiple PMs for each fund it manages, it IS NOT, IMO, an investment committee approach. Each PM has a sleeve of capital that he/she has discretion over so they are effectively "star" managers, but just operating without a construct that provides diversification. The PMs are not collaborating to come to a single investment decision. I don't think many retail investors know this is actually how AF manages its funds.
A significant portion of our AF assets are in IRA accounts. AF considers the total of all account assets, IRA or other, in the determination of their load schedule, which helps greatly in achieving no-load status. Additionally, some load funds also impose a load on shares purchased through dividend reinvestment. American Funds did not do that- all dividend reinvestment was always at NAV. Additionally, if one sold a fund, transferring the proceeds to their MMKT fund, and then later redeployed those proceeds for a fund purchase there was no load on that purchase either. These details are quite important in comparing one "load fund" company against another.
Indexing was not an option in the years when we were building the majority of our asset base. I do use some indexing with our Schwab account, which was established for additional asset flexibility well after that major part of our asset building was accomplished.
As OJ wrote, if you like American Funds, and if you have enough invested with them, you can construct a substantially different type of actively managed portfolio than mine and not have to scurry from channel to channel. No broker fees, no loads, low cost.
If you want to work at it, it may be possible (without using a 401k) to buy R5 shares for some American Funds at an "all in" cost that's lower than A shares (or F-1 shares) cost. Though sometimes saving a just few bucks may not seem worth the effort. Especially if it takes a long term commitment to pay off.
Nevertheless, that's how you shave a quarter percent off of TCMPX (TCMIX avail at Fidelity and Vanguard with a $25K min + TF in IRAs); that's how you cut a few basis points off FMIMX (FMIUX avail at Fidelity with a $2500 min + TF in IRAs), and how you save a whopping 37 bps on QUSOX (QUSIX at Fidelity w/$2500 min + TF in IRAs).
I don't know what "Vanguard is working hard to catch up in this offering" means (ETFs?). Vanguard is the second largest sponsor of ETFs. Schwab and Fidelity are pumping out PR about selling 500 ETFs without fees, while Vanguard offers about 1800 ETFs without TFs.
I don’t know what funds @msf might own. But I do know it isn’t hard to put together a pretty well diversified actively managed fund portfolio with an average ER well under that .70% ER figure. I own some D&C myself. Have listed their 6 funds and their ERs below.
Solid house. Great for really long term investors.
Dodge & Cox International DODFX .63
Dodge & Cox Global. DODWX .63
Dodge & Cox Stock DODGX .52
Dodge & Cox Balanced DODBX .53
Dodge & Cox Global Bond DODLX .45
Dodge & Cox Income DODIX .43
Most of those families tend to run in the 0.60% to 0.90% ER range. Vanguard and DFA of course are much lower, and since Vanguard is my largest fund family by weight, those funds pull my average ER comfortably below 0.7%. @hank pointed this out also.
I've got real (i.e. more than placeholder) positions in only a couple of funds costing substantially more than 1%. Small cap int'l - hard to hold that down, and a mid cap fund (but that one's still just a small part of my portfolio).
The key to keeping one's ER low is not to go wild with funds costing over 1%. If you do that and make liberal use of low cost families, you'll have a modest cost portfolio.
Sadly, my bond funds don't do much to improve my average ER. While vanilla bond funds (including my vanilla core fund) can be found easily for around 0.45% (see, e.g. DODIX above), multisector and some other categories of bond funds tend to run higher.
Alright - it’s slightly over that .70 figure, but blend it with a 25% slug of their Inflation Protected Bond Fund PRIPX (ER .41) and you’re under below the .70 figure.
Thank you for making comment to my question.
Sorry my response was short of what you were looking for in my response to you. However, it is what it is.
Wishing you the very best with your investing endeavors.
Old_Skeet