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403b Plan With Over 20,000 No Load And Load Waived Mutual Funds

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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

 

 

Studies show and Morningstar itself believes that expenses do matter. There will always be exceptions, but on average the higher the expense, the lower the return. If higher expenses yield better results, we should double all fees today - we need the returns.

 

To prove my point, compare the AGTHX with its R6 counterpart...R6 has lower fees and a higher return.

 

Sullivan......ASP raised its cost to .15%.

 

ScottyD

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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

 

 

You should add also that Higher Expense Ratios in Mutual Funds Do Not Guarantee Lower Risk or Better Performance

 

Morgan Stanley Balanced B BGRBX Expense Ratio=1.84%; 5Yr Avg Annual Return=2.02; 10 Yr Avg Annual Return=2.71%

 

MEMBERS Large Cap Growth B MCPBX Expense Ratio=1.95%; 5Yr Avg Annual Return=0.41; 10 Yr Avg Annual Return= -1.01%

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Hello all. Both the 20,000+ and the 8,000+ figures are technically correct. 403b ASP does provide access to over 20,000+ funds. We have, however, filtered that list down for different situations, removing funds with high minimums, have been recently closed, etc. We do include the multiple fund share classes so that employers, advisors and participants can view clearly what is available. If an advisor is working with a participant and advises an American A share, that can be accommodated. If a participant wishes to self-direct and elects an American R-5, A Fidelity fund and a Vanguard fund, as long as we are not limited by state or sponsor regulations, we can accommodate that as well. If a participant wishes to use an RIA, such as Mr. Skloff, no-load or load-waived funds with low expense ratios can be chosen, so their RIA fee is a truer picture of the fees the client is paying.

It is important to know that 403b ASP is not an investment firm; we are a recordkeeping firm. As such, we do not advise participants at all regarding investments, and since we collect neither sales charges (loads) nor commissions (12b1), we will certainly provide access to any funds (a) our custodian has access to, and (b) state regulations or employer requirements allow.

I feel it is bit unjust to judge a firm such as ours by the performance of funds or share classes elected by the participant or their advisor, as we cannot be responsible for their choices, only what is available. I believe full fee disclosure, which seems to be coming in 2010, and further participant education can only lead to better and better choices by and for participants in this field.

 

DaryleP

Product Manager

403b ASP

 

 

 

 

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

 

 

You should add also that Higher Expense Ratios in Mutual Funds Do Not Guarantee Lower Risk or Better Performance

 

Morgan Stanley Balanced B BGRBX Expense Ratio=1.84%; 5Yr Avg Annual Return=2.02; 10 Yr Avg Annual Return=2.71%

 

MEMBERS Large Cap Growth B MCPBX Expense Ratio=1.95%; 5Yr Avg Annual Return=0.41; 10 Yr Avg Annual Return= -1.01%

 

 

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Thanks for the response... When was the fee raised from .10 to .15? Why was it raised, because of the need to take on additional staff to accomodate the flood from IRS reg. changes? Also, If I wasnt informed (regular mail or email) about this increase, how can I become more aware of future changes?

Do you foresee any additional increases in the near future?

THANKS

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Sullivanke,

 

*The fee schedule was changed as of Oct. 1.

 

*You are correct in that it was done in response to the large amount of staffing, office space, equipment, etc. we've had to add due to the great demand for access to our platform.

 

*I'm not sure what your status is, whether employer, advisor or participant, so I will just tell you how we announced the new fee schedule.

If you are an existing client, then the new fee schedule is moot. I refer to it as a new schedule and not a fee raise because the fee has not been raised for any existing clients. If an account was opened for you at ASP before October 1st, then your custodial/admin fee will remain 0.10%. If your account paperwork was received after Oct 1, then the new schedule would apply.

If you are an advisor with a client at ASP, you would have received an email explaining the new fee schedule.

For the rest of the world, we have had an announcement on the 'Update' section of our home page for quite some time. This is a good place to check from time to time for updates, newsletters, holiday schedule, etc.

 

DaryleP

 

 

 

Thanks for the response... When was the fee raised from .10 to .15? Why was it raised, because of the need to take on additional staff to accomodate the flood from IRS reg. changes? Also, If I wasnt informed (regular mail or email) about this increase, how can I become more aware of future changes?

Do you foresee any additional increases in the near future?

THANKS

 

 

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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%.

 

 

Thank you for responding.

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If you are an existing client, then the new fee schedule is moot. I refer to it as a new schedule and not a fee raise because the fee has not been raised for any existing clients. If an account was opened for you at ASP before October 1st, then your custodial/admin fee will remain 0.10%. If your account paperwork was received after Oct 1, then the new schedule would apply.

 

 

If you have to raise costs, exclude your existing customer base. Now that's an approach you don't often hear about. Good for you.

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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.

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