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finadvnj

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Everything posted by finadvnj

  1. Funny, how most readers of this post have watched the link. If the headline were enough, they would simply avoid reading the post and would certainly avoid watching the link. To the contrary, they take both steps. Each reader should determine if this information is useful for their own purposes. Regards, Aaron Skloff, AIF, CFA, MBA CEO - Skloff Financial Group
  2. The point is to educate investors, as many have little to no Mid Cap exposure even though it may be appropriate for them.
  3. Micro Cap Stocks Outperform Large Cap Stocks, Mid Cap Stocks and Small Cap Stocks 1926-09/30/09 See (best viewed in Full Screen Mode): Regards, Aaron Skloff, AIF, CFA, MBA CEO - Skloff Financial Group Phone: 908-464-3060 www.skloff.com 403(b) LinkedIn Group Manager
  4. Mid Cap Stocks Outperform Large Cap Stocks, Smid Cap Stocks and Small Cap Stocks 1979-09/30/09 See (best viewed in Full Screen Mode): Regards, Aaron Skloff, AIF, CFA, MBA CEO - Skloff Financial Group
  5. 1) Beating more than 84% of the actively managed large blend funds is fine with me, especially if I have no assurance that I can successfully predict the other 16%. 2) So is beating 68% of actively-managed U.S. small value funds. 3) I especially like beating 95% of actively-managed bond funds (though you left out that category). I like the way the averages are stacked in my favor. However, I do understand that some folks believe they can beat them. I think that's a loser's game in the long run, but to each his own. AP and finadvnj, I have noticed that those people who like managed funds and do well are IMO just lucky. Because their strategy cannot be replicated. In other words, if investor A makes a killing in the market and beats the heck out of all the indexes for three years in a row, investor B through Z cannot replicate what investor A has done. It’s impossible, because investor A has happened by chance to pick those funds or fund that will beat the market indexes. By the time investor B through Z catch up and purchase those ###### managed funds, they end up buying them at high prices and then when those ###### funds crash, they will sell at the low. Studies point out that this happens over and over again. The professional advisers are not immune to this flawed strategy but are often encouraged to trade because they get more money in fees. Indexing not only has a strategy but answers the question of what do I invest in and why should I invest in index funds. It’s a complete package. Its simple and easy to understand and you invest in the broad economies either domestic, foreign and or bonds. Finadvnj, you will never answer my question about which funds will beat the indices in the future because you can't. The most powerful advisers with all of their talent, education, time and resources cannot accurately predict the future. Those are the facts. The very best that investors can do is the market averages and for heaven’s sake what is wrong with 7-8% average performance for 20-30 years. I would have had so much more money had I knew about indexing 25 years ago. Studies say that the average performance of 401ks is about 2-3% since the 1980s. The averages are more than twice that much and you can get the averages through index funds. There is no guarantee except through sales pitches that people really believe they can beat the averages. For the average investor, you are pure lucky if you beat the averages over many years. Nothing wrong with being lucky, but the problem is that most people are susceptible to sales pitches about beating the averages that they really think they will be the lucky ones. It’s a losers game, always has been and always will be for the vast majority of investors. 2 cents, Steve Of course I cannot predict the future - I am human. I cannot predict what the temperature will be in Dallas, TX on August 3, 2011, but I can project that it will be higher than the national average. Yet, I can make reasonable estimates based on quantitative and qualitative research.
  6. Thank you for your feedback. See: http://www.skloff.com/biography.htm Is Vanguard in essence saying?: 16% of actively-managed U.S. large blend funds meet or exceed their index 32% of actively-managed U.S. small value funds meet or exceed their index 16% is a statistically very large percentage 32% is a statistically huge percentage 1) No. 2) We say they can - not that they will. We have exceeded our clients' risk adjusted performance expectations. A Registered Investment Advisor, like Skloff Financial Group, is compensated by fees and prohibited from collecting commissions. We would receive the same compensation for managing a portfolio of 24 (for example) index funds or managing a portfolio of 24 (for example) actively managed funds (or stocks,bonds, etc.). With the clear goal of achieving the best risk adjusted performance possible relative to client risk tolerance, we will use the best vehicle available. Many academics like things that are true 80% or 90% (for example) of the time. They do not like to address the 10% because it weakens their arguments. "It's the net margin that matters" - Aaron Skloff (feel free to add me to the list of quoted 'experts' above) There is nothing wrong with paying more for a Toyota (for example) vehicle than a General Motors (for example) vehicle if the expected out performance (net margin) is justified. For some people, achieving market or sub-market performance is adequate - thus, the index fund.
  7. Would you also tell prospective clients that most actively-managed funds underperform index funds? Yes. I would also tell them: 1) Many actively-managed funds outperform their index. 2) There are hundreds of different indices. 3) Wealth management, like a surgery, it is best performed by a licensed experienced professional.
  8. Sir, I'm just wondering how you would respond to a client who tells you that he is not interested in outperforming the markets, but instead is merely interested in matching the markets' returns. I would tell them the inherent costs of virtually every index funds guarantees them they will underperform the index. Inherent costs and transactions costs of virtually every ETF guarantees them they will underperform the index. There are a small number of institutional index funds (which often have $1 million minimum deposits) that can generate equal or better performance than index returns.
  9. I am not implying anything. The facts speak for themselves. In the vast majority of instances, you are guaranteed to underperform the index by using an index fund. In the vast majority of instances, you are not guaranteed to underperform the index by using an actively managed fund.
  10. Regarding the article and study, consistency is much less important than long term risk adjusted performance. Lower Expense Ratios (Often Seen in Index Funds) in Mutual Funds Do Not Guarantee Lower Risk or Better Performance Vanguard Total Stock Mkt Idx (VTSMX) ; Expense Ratio=0.18%; 3 Yr Sharpe Ratio= -0.36; 5Yr Avg Annual Return=1.17%; 10 Yr Avg Annual Return=0.10% American Funds Gw Fund of Amer A (AGTHX.LW); Expense Ratio=0.76%; 3 Yr Sharpe Ratio= -0.28; 5Yr Avg Annual Return=3.06; 10 Yr Avg Annual Return=3.19% Fidelity Contrafund (FCNTX) ; Expense Ratio=0.95%; 3 Yr Sharpe Ratio= -0.19; 5Yr Avg Annual Return=4.86; 10 Yr Avg Annual Return=3.73% The performance data quoted represents past performance, and past performance is not a guarantee of future results. Performance Data as of 11/24/09 Source: Morningstar
  11. Fortunately, an open architecture vendor will expand its choices as new mutual funds are introduced. Unfortunately, many annuities vendors have a difficult time adding investment choices to their offerings (legal red tape) or simply choose not to add new investment choices (investors generally face a surrender penalty to leave, so why add more work) - even if it would be in the best interest of investors.
  12. Lower Expense Ratios in Mutual Funds Do Not Guarantee Lower Risk or Better Performance Vanguard Total Stock Mkt Idx (VTSMX) ; Expense Ratio=0.18%; 3 Yr Sharpe Ratio= -0.36; 5Yr Avg Annual Return=1.17%; 10 Yr Avg Annual Return=0.10% American Funds Gw Fund of Amer A (AGTHX.LW); Expense Ratio=0.76%; 3 Yr Sharpe Ratio= -0.28; 5Yr Avg Annual Return=3.06; 10 Yr Avg Annual Return=3.19% Fidelity Contrafund (FCNTX) ; Expense Ratio=0.95%; 3 Yr Sharpe Ratio= -0.19; 5Yr Avg Annual Return=4.86; 10 Yr Avg Annual Return=3.73% The performance data quoted represents past performance, and past performance is not a guarantee of future results. Performance Data as of 11/24/09 Source: Morningstar
  13. As an investment advisor we manage your account for a percentage of the assets under our management. The annual fee ranges from 1/2 of 1% to 2%, depending on the size and complexity of your account. In the example of solely a $10,000 account (although we cannot 'manage' an account with just one investment on an ongoing basis) it is quite likely the fee would be 1.5%.
  14. In the 403b plan we offer, the investor who purchases either the Putnam RetirementReady 2030 Fund (PRRQX) or Fidelity Freedom 2030 Fund (FFFEX) fund: 1) Does Not Pay Loads, 2) Does Not Pay Sales Charges 3) Does Not Pay Transactions Fees The underlying administrative provider assesses a $40 account fee and 15/100 of one percent of the assets in the plan on an annual basis (actually broken up into quarterly increments). Skloff Financial Group does not receive a single penny of the above. Skloff Financial Group assesses fees based on the value of the assets we manage, always including all assets we manage for the client (both inside and outside the 403b and/or 457b and/or 401k and/or IRA, etc.).
  15. Different clients have different needs. As certain mutual funds have minimum investment requirements (which many investors can easily meet), some share classes may not be available to certain clients (who invest modest amounts). We review the database to assure each client receives the lowest expense share class based on their individual circumstance. Our goal is to achieve the highest risk-adjusted performance net of fees. Through a combination of strategic and tactical discretionary portfolio management, we manage risk and performance simultaneously. Since our fees are based on the value of the assets we manage, our goal is maximize growth at the optimal risk level. These skill sets can only be refined with extensive education and experience - criteria oftentimes lacking in the retirement plan marketplace. Like a surgeon, we do not give 'general guidance'. If you want general information, feel free to review our website, as it provides dozens of articles we have published in the financial press on a host of topics, including: estate planning, financial planning, retirement planning and tax planning. We give specific guidance and tailored investment management services designed for a specific client's needs. We understand the client's risk level through: 1) a conversation (e.g.: in person, phone call, web call, etc.) and 2) a written risk profile None of this conflicts with the original post.
  16. As an RIA, Skloff Financial Group is prohibited by law from collecting commissions and/or 12b1 fees. Of course, like a surgeon, we are compensated with fees for our services.
  17. There is noting difficult about it. Certain mutual fund companies waive loads for certain investment firms, like Skloff Financial Group. There are fees (12b1, sub-TA, etc.) already built into the vast majority of mutual funds, from the American Funds Growth Fund of America (largest open end equity mutual fund) to the Fidelity Investments Contrafund. See: http://www.investopedia.com/terms/l/load_waived_fund.asp The IRA fees are based on the size and complexity of the account(s).
  18. The loads are waived for clients utilizing our Registered Investment Advisor (RIA), even if the only account we manage for the client is their 403b. Yes, companies traditionally charging loads (Putnam for example) are just forgoing the sales charge, for our RIA clients. We have the same relationships on other platforms and other types of accounts (401k, 457, IRA, Roth IRA, SEP-IRA, Individual accounts, Joint accounts, Trust accounts, etc.).
  19. We offer plans (401k, 403b, 457b) where participants can have access to thousands of no load and load waived mutual funds. The 403b plan we recently implemented chose to offer thousands of no load and load waived mutual funds to its participants. The insurance companies are not happy about this.
  20. Unfortunately, almost 80% of 403b investors are still foolishly using annuity providers instead of open architecture, no load and load waived mutual funds. See: http://www.403bwise.com/features/redundantfees_as.html
  21. When you have 23,000 choices, hundreds are going to be excellent (defined by risk adjusted performance), thousands are going to be average and thousands are going to be poor. That said, few plans can even offer hundreds of excellent mutual funds. Every investor's needs are different, so portfolios and fees (based on assets) will vary. Always happy to talk specifics, no obligation, on a one-on-one basis.
  22. The count of 23,000 I am referencing to only includes funds available on the 403b platform. Different clients may be best suited by different share classes. Some share classes require minimum investment amounts. The point is districts and employees should be aware there is a viable platform available, offering thousands of no load and load waived SEC registered mutual funds.
  23. Many mutual funds have different share classes. For example, the American Funds Growth Fund of America (largest open end equity mutual fund) has: Class A (front end sales load, unless waived) Class B (back end sales load, unless waived) Class C (back end sales load, unless waived) Class F-1 (load waived, only available from fee based Financial Advisors) Class F-2 (load waived, only available from fee based Financial Advisors) Class 529-A (for 529 account) Class 529-B (for 529 accounts) Class 529-C (for 529 accounts) Class R1 (for retirement plans) Class R2 (for retirement plans) Class R3 (for retirement plans) Class R4 (for retirement plans) Class R5 (for retirement plans) Class R6 (for retirement plans)
  24. Point well taken. We have modified the post to remove any suggestions to calling us. There are oftentimes multiple share classes (A,B,C,D,etc.) of the same mutual fund. Technically, it is over 23,000.
  25. We recently introduced a 403b plan to a public school district that has over 1,000 employees. The 403b plan offers over 20,000 no load and load waived (participant pays no load) mutual funds. The employees were very unhappy with the salespeople from the insurance companies offering annuities, with all their restrictions, Morality and Expense (M&E) charges and lack of full disclosure. The employees are now very happy with their no load and load waived mutual funds based 403b plan. Now, the employees work with fiduciaries obligated by law to act in their best interest. The school district is also very happy, as the plan costs them nothing.
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