No Ticket Charge Mutual Funds

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Sep 20, 2009 1:35 pm

My firm clears through Pershing.  We are extremely happy with them and they are a great partner to have in this environment.  My only complaint is that they have a minimum 90 day holding period on their no ticket charge MF (FundVest).  It's not that I'm looking to day trade funds, but if you are running models and trading multiple accounts at a time, you have to be extremely careful during a rebalance, allocation change, or fund swap or you could hit clients with a $50 redemption fee.

Is this holding period/redemption fee common with other clearing firms (First Clearing, Schwab, National Financial, etc etc)??  I find it to be totally ridiculous!!

Sep 20, 2009 11:17 pm

Any place that waives fees, are going to have restrictions on those assets.

Sep 21, 2009 10:21 am

We keep the 12b-1's, so I'm sure there's a revenue sharing agreement.  I could understand the redemption fee if the trade was a full liquidation, but that fee also applies even if you are doing a rebalance or systematic liquidation.  I just feel like they are restricting the client.

Sep 21, 2009 10:31 am
mrclutch:

We keep the 12b-1's, so I'm sure there's a revenue sharing agreement.  I could understand the redemption fee if the trade was a full liquidation, but that fee also applies even if you are doing a rebalance or systematic liquidation.  I just feel like they are restricting the client.

 
No offense but they aren't doing anything.. If you don't want to pay the fee then you are restricting the client.
Some other options
1. Use a different fund pay the ticket and don't worry about it
2. Redo your trading techniques around the 90 day window
3. Find a clearing firm that doesn't charge tickets or has redemption fees on funds(TDA)
 
Harbor Financial(not with them but would like to be) has a great set-up with TDA
Sep 21, 2009 10:52 am

We don't have an auto rebalance function, it is done manually, so we have to be aware of when the account was opened or last traded.  at some point, we will group them based on what month they were opened (a jan, april, july, oct group, for example) and then make sure we don't make any changes until the 90 day window is up.

Sep 21, 2009 2:24 pm

Clutch-

try some of the smaller firms that cater to active management. Rydex (now ceros financial) does. I spoke with them awhile back and there are no short term trading issues. And I think they will hold licenses now, but I am not sure.

Some of the trust companies like trust co of america and millennium will let you actively trade also - but there are bps fees.

I was able to get TDA to waive the fees when I threatened to move my business away from them.

If you are using a broker dealer it may be more of an issue with them and not Pershing.

Sep 23, 2009 5:04 pm

The BD keeps the sub TA fees! Not 121b Fees



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