How do you pick funds - REALLY!

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Jun 6, 2007 6:20 pm

[quote=anonymous]

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. [/quote]

Because the total addressable market for UIT is huge. In theory all mutual fund holdings are targets.

[quote] 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.[/quote]

The question was UIT's vs everything else, not fee-based vs everything else.

I'm glad that somone else here recognises that rolling a 3.75% commision every 15 months is going to be expensive to the client. Worse than A-shares.

[quote] 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.

[/quote]

I'm interested in the thought process that prevents people from using UITs over A-shares.


Jun 6, 2007 6:34 pm

[quote=Bobby Hull][quote=joedabrkr] [quote=Bobby Hull]

You should sue the government. That Agent Orange that your mom was exposed to during your second trimester did some really bad stuff.

[/quote]

BH ultimately you can post whatever you want, but I think this is the kind of over the top counterproductive stuff that is getting you a lot of cr*p from certain parties.  For what it's worth...
[/quote]

It's not worth much. It'll be forgotten in 5 to 10 minutes.

[/quote]

I guess Bobby is just some kind of internet sociopath who likes to hurt people. As far as trolls - a troll seeks attention, a troll is a troll.

The perspective that may be lost on some veterans here is that, a professional forum may be some people's first experience at putting themselves and their ideas out there - and those new people are already engaged in a stressful test of survival, whether they are actually new in the business or established and looking for growth or support.

Bobby is responsible for itself. It would be nice if newbees were informed of his sociopathic stature at an early stage by helpful members from time to time.

The idea of somehow tacitly condoning the " hazing " of new posters seems a bit outdated. A troll is a troll, Bobby, with its industry experience and knowledge, seems at time to be a troll with a knife.

Joe appeals to Bobby, and Bobby reserves the right to be a Sociopath. If you have ever known one, you know they don't have a conscience, a sense of right and wrong.

The real damage, as pointed out by SF and NY, is that Bobby pulls much seasoned and focused discussion down into the gutter. The arguement that a Happy Camp humor can overcome it does not square, because good debate requires passion.

Here is an action proposal: would the non industry poster who cares deeply about integrity take responsibility for being Bobby's conscience in a concise - concise, humorous, helpful way? It could be like one of those little fish that rides along with a whale. Just a little disclaimer or joke here or their - be brief! I'm sure some folks are at least a little fond of it - it cares deeply for justice. The "acid" test would be, if it does it's volunteer job and doesn't irritate Joe Broker.

Jun 6, 2007 7:20 pm

I'm glad that somone else here recognises that rolling a 3.75% commision every 15 months is going to be expensive to the client. Worse than A-shares.

ALLREIT, please use correct facts.  You are very far off with your numbers. Typically, you are looking at 2.95%.  This assumes a small investment of under $50,000.  For large investments of over $1,000,000, the charge is 1.4%.   If we use an example of $100,000.  The original investment will be 2.45%.  Every 15 months thereafter, it will be 1.45%.  It's more expensive than an "A" share, but not by some huge amount.  They are less expensive than what someone would normally pay in a fee-based account.

I'm interested in the thought process that prevents people from using UITs over A-shares.

1) They aren't tax efficient since the entire portfolio gets turned over every 15 months (or a different length of time depending on the specific UIT)

2) The UIT that someone buys in June, can't be purchased in July.  If someone is dollar cost averaging into 4 different UITs at the end of the year, they will have 48 different investments.  Is it even possible to automatically DCA into a UIT?  I think that the answer may be "no" since it doesn't accept new money when the month is done.

These two things combined is why I normally use UITs for lump sum investments into IRA's for people who are relatively aggressive. 

Jun 6, 2007 8:35 pm

[quote=AllREIT]

[quote=drewski803]

I’d love to see AllREIT’s sales pitch. 
Think he covers the fact that ETF’s have 0 opportunity to EVER
out-perform “the market”?  Or the fact that his advisory fee will,
over time, cost considerably more than an up-front commission? 
Wonder what his clients would think if they knew that they would always
be losers.

[/quote]



In general, the best you can do is hope to get your fair share of the markets returns less your investment costs. You must ignore the sexy lady who says otherwise.



We can assure clients that their ETF investments won’t do worse than (x-bp) than the indexes, we invite them ask their stockbrokers the same question about proposed SMA’s/A-shares.



Our sales pitch is pretty simple.


Our clients have long time horizons.


You can not beat the market with any type of active trading strategies over the time horizons we are planing for.


Therefore we aim to buy and hold asset classes cheaply and to only
buy stocks with a margin of safety and clear prospects for a cash
bailout.


Stock market returns are explained by the Fama/French model and the non-distressed bond market is effecient.


An continious advisory fee aligns our interests with the clients. It promotes an ongoing relationship. A commision model encourages advisors to ignore or churn the account.



The stockbroker who actually bought and held A-shares for as long as he said he would have gotten fired for non-production long ago.


All investment strategies should be based on the goal of the
preservation of principal and having an absolute return greater than
CPI.



[/quote]



I note that Drewski hasn’t responded yet, but I wanted to bump out my reply from under the latest Bobby drama.
Jun 6, 2007 11:29 pm

[quote=anonymous]

I'm glad that somone else here recognises that rolling a 3.75% commision every 15 months is going to be expensive to the client. Worse than A-shares.

ALLREIT, please use correct facts.  You are very far off with your numbers. Typically, you are looking at 2.95%.  This assumes a small investment of under $50,000.  For large investments of over $1,000,000, the charge is 1.4%.   If we use an example of $100,000.  The original investment will be 2.45%.  Every 15 months thereafter, it will be 1.45%.  It's more expensive than an "A" share, but not by some huge amount.  They are less expensive than what someone would normally pay in a fee-based account.

I'm interested in the thought process that prevents people from using UITs over A-shares.

1) They aren't tax efficient since the entire portfolio gets turned over every 15 months (or a different length of time depending on the specific UIT)

2) The UIT that someone buys in June, can't be purchased in July.  If someone is dollar cost averaging into 4 different UITs at the end of the year, they will have 48 different investments.  Is it even possible to automatically DCA into a UIT?  I think that the answer may be "no" since it doesn't accept new money when the month is done.

These two things combined is why I normally use UITs for lump sum investments into IRA's for people who are relatively aggressive. 

[/quote]

Why are you even talking to this f**king idiot? The guy is a total waste of skin!

Jun 19, 2007 9:17 pm

[quote=anonymous]

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.

[/quote]

Explain how you don't see them as tax-efficient.  If you put a UIT up against actively managed money, you there's no comparison.  You could have a MF that that is a loser for the year, but still owe imbedded capital gains as a result of turnover within.  

As for performance, since there's no manager to feed Ferraris to, performance is much better.  Take Van Kampen Enhanced Tot Market--this UIT has a 10-yr number of 25.26%, 13-yr 23.16% and has only 2 down years: '94 and '02 (-1.6 & -6.07) compared to S&P in those years of (1.28% and -22.10%).... Not bad at all.