So who is moving clients to cash?
Global bond funds are up. You can even sell some at Jones but the wholesalers can’t tell you about them unless you ask…
AF CWBF and Templeton Global Bond are talked about all the time. And they are part of certain recommended portfolios. Not sure where you are getting your info.
However, nobody would have been allocating a substantial portion to that class, nor would anyone have known 9 months ago that this would have been one of the few classes holding up (regardless of what people may say NOW).
[quote=iceco1d][quote=pratoman]PSS - We aren't paid to have an opinion about the unknown, we are paid to have a plan for the unknown. Gordon - what an awesome quote. I am emailing to my office email addess.[/quote] WTF Pratoman! That's MY quote?!?!??! Just joking around of course...but it is my quote! [/quote] I'm taking that quote too! Thanks Gordon!!! Kidding, Ice Man. Where's Maverick and Goose and Viper?
Going to cash now? NO. Reallocated most aggressive accounts in early January when relative strength changed, put some money back into the market in mid March. Typical conservative client down about 2.5%, aggressive clients down about 6%. Very few complaints.
Good thread guys.I'm using a lot of rental REITs right now. The sub-prime mess has secured that market for at least the next 10 years.
[quote=iceco1d][quote=pratoman]PSS - We aren't paid to have an opinion about the unknown, we are paid to have a plan for the unknown. Gordon - what an awesome quote. I am emailing to my office email addess.[/quote] WTF Pratoman! That's MY quote?!?!??! Just joking around of course...but it is my quote! [/quote] Sorry Ice, my bad! It IS a geat quote.
[quote=MLurative]Good thread guys.I'm using a lot of rental REITs right now. The sub-prime mess has secured that market for at least the next 10 years.[/quote] Can you name some names ML?
In regards to VA's, I know Met is a wildly popular one in our system. Maybe it's the Snoopy thing but clients seem to feel comfortable. REITS are interesting as they were outperforming prior to the latest downturn. AWP is a global reit, unleveraged, paying over 13% and it pays monthly. This is a very volatile cef but the income is great.The problem my clients have is the let's say 4-6% hit to their investments plus the 4-6% annualized withdrawal they are taking.
One thing I did do earlier this year was move intermediate term cash into preferreds instead of putting it into mutual funds. They are paying between 7.5%-8% and most are callable in 4-5 years. Right now they are down about 5%, but the income is still coming into the accounts every month.Originally I bought them because I didn't want to put as much of the clients' money into mutual funds and wanted better yields than CDs. I thought I might have held on to them for 1 year, but now 4-5 years at that yield isn't so bad. I would really hope the economy gets better by then. I don't know how much worse it will get, but it just feels too late to move to cash.
I bought and have since sold those preferreds. They should do ok, assuming we don’t have a total financial meltdown.
With the IndyMac news, FDIC, C, MER, WB, WM, and other awesome news out there, is anyone that was just sitting tight now thinking of moving to cash, or something else?
[quote=BullBroker]Not saying that I advocate going 100% cash at all, but I bet the clients of those "cookie cutter tactical programs" in all money markets paying 2.25% getting charges a 2% fee are much less pissed off. Than the clients who's shmuck advisor stuck them in a Vanguard Index fund touting the low .15% fee now down -15.09%. Cookie Cutter tactical: 2.25% money market - 2.00% fee = Total before Tax return of .25% Shmuck Advisor Vanguard Index plan: -15.09% return - .15% fee = Total before Tax return of = -15.24% I hope the majority of the advisors on this board are somewhere in between these two examples. Not saying just saying, you have to look at all things relative[/quote] Good point Bull! Yes, I'm inbetween that. That's the thing about fees and costs of things. From my VA wholesaler: Costs are only an issue in the absence of value. Great line. Can you imagine this conversation: Client: We're down 15 effin %! Advisor: Yeah, but we're only paying 15 bps! It kind of makes me want to call all the DIY indexers and ask them how their low expense funds are doing. Blackrock has a great brochure for their Global Allocation fund on their website. Basically, we can pay little to ride the market up and down and up and down, or we can pay a little more to lose less and perform very well in all market conditions. And they aren't benchmarking to the S&P, it's to the flexible portfolio benchmark. Still crushes it.
I like inflation protected bond funds along with short term and world bond funds, all NAV moves. I don’t reinvest the dividend to allow cash to build up. I do leave about 25% of the acct in the market to capture some upticks in the market. It shows the client a plan in this particular scary moment to soften anymore downturns. Again, the same old same old, where a lot of my new accts are from referrals who haven’t heard from their advisor. PLEASE call you clients and discuss their accounts. They just want to know your looking at it.
Are you under the impression that the S&P or Dow will end the year positive (after the 15bps fee of course)?No I think Vanguard does a very good job at tracking an index of +/-500 stocks for a 15bp fee. I don't know how anyone else could do a better job of tracking an index. No, I am perfectly aware that Vanguard has many different types of funds that track all sorts of sectors, money funds, and bond funds. I was referencing the "shmuck" analytical theorist broker that believes indexing everything is the only way to go. Don't worry I wasn't referring to you icecold, I know you are not the die hard "index guy" you will play some satellites.
Ice if you wanted to do a core satellite approach, with Large Cap being the core ETF, and actively managed funds for the other styles as the satellites, which ETF would you use - would it be SPY, or IWF/IWD? Or are you using something else
As far as active ETF management, I can definitely recommend taking a look at a firm by the name of Compass EMP (http://compassemp.com/).
The YTD #s on their risk-allocations definitely bode well for indexes.
Funny - you're right we posted at the same time. Posts dated two minutes apart. I like the Russell combinations as well. I have been running discretionary portfolios using primarly MF's, in a wrap platform including Janus Adv 40, and Pioneer Cullen Value/Eaton Vance Large Value for the large cap piece. I am leaning heavily toward replacing the large cap with IWF/IWD, because even using instituional shares, or A shares and giving 12b-1 fees back to the client, the all in expenses ae not low, between the ER and the Wrap fee. The trouble i am having is that in the past, so much of my outperfornance has come from those large cap funds i mention. But i should know better, thats probably exactly why i should go to ETF's for the core. I'm obviously struggling with this, but will probably go towards the idea soon. Its also good marketing, IMO
Hehe. My post kind of gave that away I guess, but I think we were typing at the same time. I would go with IWF/IWD without a doubt.
80% of fund managers cannot beat the index. 100% of index funds cannot beat the index.
[quote=Hobby Bull]80% of fund managers cannot beat the index. 100% of index funds cannot beat the index.
That’s not entirely fair, the index doesn’t have to pay me to manage it, it lives in this land of milk and honey where everything is free and the beer flows like wine.
I think you hit the nail on the head with your “hourly-fee-only-planner” example. I have nothing against Vanguard or T. Rowe Price, I actually use some T. Rowe Price funds because they are the best in certain styles.I can't tell you how many account statements I have looked at for prospects that are 100% Vanguard S&P stuck in a fee-based type platform I have come across. Those are the shmuck advisors I am talking about. Those advisors give Vanguard a negative "stigma" so to speak. I still feel the need to throw up a little every time I meet a prospect and see 100% Vanguard S&P in a fee-based platform.