Need to find Loaded Index Funds

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AaronS
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Need to find Loaded Index Funds

Postby AaronS » Mon Jun 19, 2017 1:43 pm

Hello,

I currently invest in the Gone Fishing Portfolio asset allocation model utilizing Vanguard funds. I do this using a dollar cost average approach monthly, with some annual re-balancing.

I also work for a broker dealer, and am required to keep my investment accounts in-house by our compliance department. Due to the new Fiduciary Rule, my firm no longer allows me to invest in no load funds, which is putting me in a tough spot. Does anyone know of alternative fund families who offer similar index funds, which have loads? If so, I am able to purchase A shares at NAV, which I think would be my best option.

Ticker Ticker (Admiral) Name
VTSMX VTSAX Total US Stock Market
NAESX VSMAX US Small cap index
VEURX VEUSX European stock index
VPACX VPADX Pacific stock index
VEIEX VEMAX Emerging Markets Index
VFSTX VFSUX Short-Term Bond Index
VWEHX VWEAX High-Yield Index
VIPSX VAIPX TIPS Fund
VGSIX VGSLX REIT Index
VGPMX N/A Precious Metals Fund

The other option I'm considering would be utilizing ETFs. The issue I have with this approach is that I would no longer be able to efficiently utilize dollar cost averaging into the various positions, as the $21 commissions at my firm would eat into my small dollar amount trades.

Any help and advice is appreciated.

Thanks,
Aaron

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warowits
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Re: Need to find Loaded Index Funds

Postby warowits » Mon Jun 19, 2017 1:57 pm

AaronS wrote:Due to the new Fiduciary Rule, my firm no longer allows me to invest in no load funds,


The contorted logic which would have to go into that sort of reading of the fiduciary rule is literally beyond my comprehension.
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Re: Need to find Loaded Index Funds

Postby shorvath » Mon Jun 19, 2017 2:03 pm

warowits wrote:
AaronS wrote:Due to the new Fiduciary Rule, my firm no longer allows me to invest in no load funds,


The contorted logic which would have to go into that sort of reading of the fiduciary rule is literally beyond my comprehension.


I'll take a swing at this:

"We put all of our clients into loaded funds because they are the best! See, we even put all of our own money into loaded funds! We wouldn't do that if it were a rip-off. Would we???"
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Re: Need to find Loaded Index Funds

Postby aristotelian » Mon Jun 19, 2017 2:15 pm

warowits wrote:
AaronS wrote:Due to the new Fiduciary Rule, my firm no longer allows me to invest in no load funds,


The contorted logic which would have to go into that sort of reading of the fiduciary rule is literally beyond my comprehension.


"Because loaded funds are now legally required to be in the clients' interest, we can now steer our employees to them (and allow them to subsidize our plan) without fear of lawsuit."

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Re: Need to find Loaded Index Funds

Postby gwrvmd » Mon Jun 19, 2017 2:21 pm

Good show shorvath! It had me stumped, you are a more creative thinker than I........Gordon
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Re: Need to find Loaded Index Funds

Postby livesoft » Mon Jun 19, 2017 2:25 pm

I'm amused that your employer cannot help you with this. By "employer" I mean anyone at your firm.

One can always DCA into a fund and then sell once a year and buy an ETF of the same asset class. Of course, you paid the load for the fund, but loads can be waived and can be small, so you would at least be saving on the annual expense ratio.

Mutual fund screeners at typical brokerage firms can find index funds with loads, so if you don't use a real brokerage firm, get one. Someone at your firm has to be able to show you how to do this.

Another way to DCA with a commissions is to have as few commissions as possible. One month buy VTI, next month DCA into cash. Next month buy VXUS with the cash and contributions. Next month cash. Next month buy BND. You could decide how many transactions you will do every year.
Last edited by livesoft on Mon Jun 19, 2017 2:29 pm, edited 1 time in total.
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prudent
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Re: Need to find Loaded Index Funds

Postby prudent » Mon Jun 19, 2017 2:28 pm

When you say you can purchase A shares at NAV, do you mean you would be buying funds with front-end loads, but the load would be waived for you?

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Re: Need to find Loaded Index Funds

Postby arcticpineapplecorp. » Mon Jun 19, 2017 2:35 pm

Sorry, can't help you. As the following article says, "Investors should not be paying this much for a passively managed product,"

http://www.reuters.com/article/us-index ... N920140113
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Re: Need to find Loaded Index Funds

Postby retiredjg » Mon Jun 19, 2017 3:21 pm

AaronS wrote: Due to the new Fiduciary Rule, my firm no longer allows me to invest in no load funds, which is putting me in a tough spot.

Are you sure? In most cases, investment companies are dropping loaded funds in order to meet the fiduciary standard. I wonder if there is some misunderstanding.

I don't recall every hearing of an index fund with a load, but nothing's impossible.

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Re: Need to find Loaded Index Funds

Postby nisiprius » Mon Jun 19, 2017 3:23 pm

AaronS wrote:...Due to the new Fiduciary Rule, my firm no longer allows me to invest in no load funds,...
That definitely sounds like a fib to me and I hope you will press them for the details.

I definitely think your best option is to invest in ETFs.

Rydex offers an S&P 500 index fund, RYSOX, with a 4.75% load and a 1.55% expense ratio. It cannot possibly be a good option to pay a 1.55% expense ratio for an index fund, but it is indeed a loaded index fund.
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Re: Need to find Loaded Index Funds

Postby nisiprius » Mon Jun 19, 2017 3:29 pm

shorvath wrote:
warowits wrote:
AaronS wrote:Due to the new Fiduciary Rule, my firm no longer allows me to invest in no load funds,
The contorted logic which would have to go into that sort of reading of the fiduciary rule is literally beyond my comprehension.
I'll take a swing at this: "We put all of our clients into loaded funds because they are the best! See, we even put all of our own money into loaded funds! We wouldn't do that if it were a rip-off. Would we???"
Very clever, but it doesn't hold water because their customers have to pay the load and, according to AaronS, the firm's employees do not pay the load. Unless they can also get the load waived for their customers, they are still putting their own interests ahead of the customers. "We are putting you into funds we would not buy for ourselves unless the load were waived."

Also, I am darned if I can think of any logic by which the fiduciary rule would allow purchases of ETFs but not no-load mutual funds. If employees believe in their hearts that ETFs are better than load funds, then, if they are putting their client's interests firsts, shouldn't they be putting their clients into ETFs as well?
Last edited by nisiprius on Mon Jun 19, 2017 3:32 pm, edited 1 time in total.
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Re: Need to find Loaded Index Funds

Postby retiredjg » Mon Jun 19, 2017 3:31 pm

nisiprius wrote:Rydex offers an S&P 500 index fund, RYSOX, with a 4.75% load and a 1.55% expense ratio. It cannot possibly be a good option to pay a 1.55% expense ratio for an index fund, but it is indeed a loaded index fund.

Pretty awful. It would be better to use Class A American Funds.

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Re: Need to find Loaded Index Funds

Postby arcticpineapplecorp. » Mon Jun 19, 2017 3:35 pm

retiredjg wrote:I don't recall every hearing of an index fund with a load, but nothing's impossible.

http://www.reuters.com/article/us-index ... N920140113

As was mentioned already (and in the article) Rydex's S&P500 has a load (and a very high annual expense ratio). And State Farm's S&P500 index fund also has a load (5.0%) and a higher than should be expense ratio..0.56% per year (State Farm was also mentioned in the article).

https://www.google.com/search?q=state+f ... 8&oe=utf-8

I think the term "loaded index funds" should be a new oxymoron like plastic glasses, down escalator, jumbo shrimp...loaded index funds.
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Re: Need to find Loaded Index Funds

Postby retiredjg » Mon Jun 19, 2017 4:01 pm

AaronS wrote: If so, I am able to purchase A shares at NAV, which I think would be my best option.

What does this mean?

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Re: Need to find Loaded Index Funds

Postby AaronS » Mon Jun 19, 2017 6:42 pm

warowits wrote:
AaronS wrote:Due to the new Fiduciary Rule, my firm no longer allows me to invest in no load funds,


The contorted logic which would have to go into that sort of reading of the fiduciary rule is literally beyond my comprehension.


Believe me, the humor/hypocrisy is not lost on me. My firm is interpreting the Fiduciary Rule as: you cannot offer no load funds to some investors and not others, and therefore they are not allowing any new purchases in my commission based retirement accounts. Previously, I was not paying commissions to trade mutual funds, and since I was buying no load funds, my firm was not earning money on the accounts. In short, they are using the cover of the new rule to make the employee accounts more profitable to the firm.

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Re: Need to find Loaded Index Funds

Postby Mel Lindauer » Mon Jun 19, 2017 6:48 pm

IMO, that's absurd. My recommendation would be to look for a new job where your and your clients' interests are on the same side of the table.
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Re: Need to find Loaded Index Funds

Postby AaronS » Mon Jun 19, 2017 7:04 pm

prudent wrote:When you say you can purchase A shares at NAV, do you mean you would be buying funds with front-end loads, but the load would be waived for you?


Yes, I could buy Class A shares, which carry a front end load... being an employee of a broker/dealer, I am able to purchase funds at NAV, which would mean I do not have to pay the front end load. I would still be responsible for the 12B1 fees annually. The issue I'm running into is trying find a loaded Index fund.

If I'm missing something, please correct me. I appreciate everyone's time.

Aaron

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Re: Need to find Loaded Index Funds

Postby Gadget » Mon Jun 19, 2017 7:07 pm

So curious which firm is doing this... Sounds very Edward Jonesian.

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Re: Need to find Loaded Index Funds

Postby livesoft » Mon Jun 19, 2017 7:10 pm

A fund screener shows
Image

I'm almost sure I could find some more. For instance, what about Ivy Proshares?
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Re: Need to find Loaded Index Funds

Postby prudent » Mon Jun 19, 2017 7:20 pm

Found a couple dozen candidates using the Zacks mutual fund screener. Criteria used: Load=Y, Portfolio turnover <= 25, Total issues >= 300 . Not all returned candidates were index funds, but most were.

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Re: Need to find Loaded Index Funds

Postby staythecourse » Mon Jun 19, 2017 7:25 pm

Mel Lindauer wrote:IMO, that's absurd. My recommendation would be to look for a new job where your and your clients' interests are on the same side of the table.


Agree. If you KNOW your employer is not looking out for your best interest then why stay. Life is too short and retirement planning is not trivial.

Good luck.
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Re: Need to find Loaded Index Funds

Postby AaronS » Mon Jun 19, 2017 7:30 pm

Mel Lindauer wrote:IMO, that's absurd. My recommendation would be to look for a new job where your and your clients' interests are on the same side of the table.


I agree, it's frustrating. I do not personally have "clients", as I work in Ops. Although I could look for a new job, that may be a bit knee jerk, and this is the position I'm in currently, no matter how frustrating it may be.

Again, the reason I would prefer to to find similar loaded funds is due to the fact it would cost me $0 in trading commissions. However, if a feasible fund is not out there, I can find comparable ETFs and move towards a less frequent rebalancing, since I will have to paying commissions on the trades.

Thanks,
Aaron

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Re: Need to find Loaded Index Funds

Postby AaronS » Mon Jun 19, 2017 7:33 pm

Gadget wrote:So curious which firm is doing this... Sounds very Edward Jonesian.


I would love to say, but I don't feel bashing my employer is the smartest move on my part. It is not EJ :happy

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Re: Need to find Loaded Index Funds

Postby Grt2bOutdoors » Mon Jun 19, 2017 7:35 pm

You need to get a new job Aaron. Find an Ops job elsewhere, take your skills to an employer which values you. Absurd is an understatement.
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Re: Need to find Loaded Index Funds

Postby Grt2bOutdoors » Mon Jun 19, 2017 7:36 pm

AaronS wrote:
Gadget wrote:So curious which firm is doing this... Sounds very Edward Jonesian.


I would love to say, but I don't feel bashing my employer is the smartest move on my part. It is not EJ :happy


Smart move. Heck, they may be reading your post right now so I hope that's not your real name your posting with.
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Re: Need to find Loaded Index Funds

Postby AaronS » Mon Jun 19, 2017 7:47 pm

prudent wrote:Found a couple dozen candidates using the Zacks mutual fund screener. Criteria used: Load=Y, Portfolio turnover <= 25, Total issues >= 300 . Not all returned candidates were index funds, but most were.


Thank you, prudent.

I will have a look at that fund screener, and see what I can come up with. I'll post the comparison when I come up with it, and see how the smart folks at Bogleheads feel I did.

Aaron

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Re: Need to find Loaded Index Funds

Postby AaronS » Mon Jun 19, 2017 7:55 pm

Grt2bOutdoors wrote:You need to get a new job Aaron. Find an Ops job elsewhere, take your skills to an employer which values you. Absurd is an understatement.


Thank you for the feedback. I will consider my options. Anyone looking to hire? I have a Finance degree, am Series 7 licensed, and have 10+ years in the industry :sharebeer

In the meantime, I do have a family to support, so I would like to continue to draw a paycheck until I find my next opportunity.

Aaron

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Re: Need to find Loaded Index Funds

Postby Lobster » Mon Jun 19, 2017 7:57 pm

I agree that your employer does not have your best interests in mind. I would focus on your own long term welfare rather than actively harming it by adhering to this absurd mandate.
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Re: Need to find Loaded Index Funds

Postby TallBoy29er » Mon Jun 19, 2017 8:00 pm

livesoft wrote:Another way to DCA with a commissions is to have as few commissions as possible. One month buy VTI, next month DCA into cash. Next month buy VXUS with the cash and contributions. Next month cash. Next month buy BND. You could decide how many transactions you will do every year.


AaronS - I would agree with livesoft. This seems to be a very simple, yet effective, method to DCA yourself into high quality ETF's. Or quite frankly, if you wanted to do this monthly, I would think, although not ideal, the fees would be low enough to let you keep moving the needle forward on your goals. Don't let the tail wag the dog.

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Re: Need to find Loaded Index Funds

Postby retiredjg » Mon Jun 19, 2017 8:14 pm

AaronS wrote:Believe me, the humor/hypocrisy is not lost on me. My firm is interpreting the Fiduciary Rule as: you cannot offer no load funds to some investors and not others... In short, they are using the cover of the new rule to make the employee accounts more profitable to the firm.

Shame on them.

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Re: Need to find Loaded Index Funds

Postby clown » Mon Jun 19, 2017 8:33 pm

I think we are too far out in the weeds with this discussion. Let's back up.

You say that your Compliance Dept requires that you keep all your investments with your employer. I would question that assertion closely. Such a "requirement" does not make sense to me. Don't blindly accept their interpretation of the rules. It is your money and you should be able to do what you want, as long as it is legal. Have you personally done your own original homework to satisfy yourself? Have you personally read the regulations? Do other broker-dealers have similar requirements?

If you are any good at your job, and I presume you are, I would find a new job.

Back in the day, I worked for a bank that required all officers to submit an annual personal financial report -- with the justification that state law required such. Many people complied. One of the new attorneys did his own homework and determined that such a requirement was not in fact required by the then-current law. He refused to comply with management's demand, and was followed by so many others that management eventually dropped their requirement. Lesson learned. Don't bend over.

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Re: Need to find Loaded Index Funds

Postby AaronS » Mon Jun 19, 2017 8:37 pm

TallBoy29er wrote:
livesoft wrote:Another way to DCA with a commissions is to have as few commissions as possible. One month buy VTI, next month DCA into cash. Next month buy VXUS with the cash and contributions. Next month cash. Next month buy BND. You could decide how many transactions you will do every year.


AaronS - I would agree with livesoft. This seems to be a very simple, yet effective, method to DCA yourself into high quality ETF's. Or quite frankly, if you wanted to do this monthly, I would think, although not ideal, the fees would be low enough to let you keep moving the needle forward on your goals. Don't let the tail wag the dog.


I agree with the premise that finding similar ETFs may be the way to go. I currently invest <$500/month spread over 10 funds... at $21/trade on ETFs, it wouldn't be feasible to DCA monthly, but I think I could be very effective doing annual rebalancing.

I'm going to consider that option as well as looking at the Zacks fund screener mentioned previously. If I can find any quality funds to replace my current Vanguard selections, I may go that rout. Does anybody here think there is any merit to finding managed funds to replace the index options. I'm a strong proponent of index investing, but would be open to any advice available.

I'll also be sure to voice my frustration to the appropriate individuals within the firm. I understand they would like to generate revenue on accounts, but I do not feel like this is the right approach on their end. I was strong armed into holding my account internally, which is common in within the industry... the problem is that now a very important investment option is being eliminated from me.

Thanks everyone for taking the time to comment, I appreciate all of the feedback.

Aaron

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Re: Need to find Loaded Index Funds

Postby AaronS » Mon Jun 19, 2017 8:47 pm

clown wrote:I think we are too far out in the weeds with this discussion. Let's back up.

You say that your Compliance Dept requires that you keep all your investments with your employer. I would question that assertion closely. Such a "requirement" does not make sense to me. Don't blindly accept their interpretation of the rules. It is your money and you should be able to do what you want, as long as it is legal. Have you personally done your own original homework to satisfy yourself? Have you personally read the regulations? Do other broker-dealers have similar requirements?

If you are any good at your job, and I presume you are, I would find a new job.

Back in the day, I worked for a bank that required all officers to submit an annual personal financial report -- with the justification that state law required such. Many people complied. One of the new attorneys did his own homework and determined that such a requirement was not in fact required by the then-current law. He refused to comply with management's demand, and was followed by so many others that management eventually dropped their requirement. Lesson learned. Don't bend over.


Hi clown,

I do not know the specific FINRA regulations that the firm is adhearing to, but the main reasoning behind it is they need to monitor for insider trading. Again, I don't know FINRA's exact stance, but it is an internal policy that I fought hard against before moving my families accounts. I offered to provide duplicate confirms/statements to the firm, but they would not budge. I've worked at another firm as well, whom had a similar policy. I can live with that requirement, but it's very frustrating that Vanguard funds are being taken away from me since they do not carry a load.

It's comical they are pulling this due to Fiduciary Rule, but it is the position I'm in.

Aaron

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Re: Need to find Loaded Index Funds

Postby alex_686 » Mon Jun 19, 2017 9:02 pm

AaronS wrote:I do not know the specific FINRA regulations that the firm is adhearing to, but the main reasoning behind it is they need to monitor for insider trading. Again, I don't know FINRA's exact stance, but it is an internal policy that I fought hard against before moving my families accounts. I offered to provide duplicate confirms/statements to the firm, but they would not budge. I've worked at another firm as well, whom had a similar policy. I can live with that requirement, but it's very frustrating that Vanguard funds are being taken away from me since they do not carry a load.


Sadly this makes some sense for brokerage accounts. Your firm can be in compliance if the other firm sends them a electronic duplicate confirm of all trades. This means both firms need to have their compliance departments wired up to each other. It is a hassle. Most firms that I have worked at try to network in a few firms, both discount and full service, as a courtesy for their employees.

2 thoughts.

Try to get your spouse to become a access employee for Vanguard. This should make the circuits melt in compliance. I had a college who was a access person and whose wife was also a access person at another firm. That was fun.

I would reread your compliance department rules again. The rules are there to prevent front running your firm or client's trading position. With that in mind, all of the compliance documents I have seen have exemptions for index funds and treasuries.

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Re: Need to find Loaded Index Funds

Postby mrc » Tue Jun 20, 2017 5:05 am

All I had to do was a) set up duplicate confirms, and b) obtain prior approval before a sale/purchase of my own company's stock. I can't see why you must buy only the high cost house funds. Use your credentials and experience to find a position elsewhere — do you really want to remain a part of a firm that treats its own employees this poorly?
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Re: Need to find Loaded Index Funds

Postby Tamarind » Tue Jun 20, 2017 6:07 am

The fiduciary role is doing its job, by bringing the interests of advisers (and their colleagues, sorry OP) forcibly into alignment with those of clients. Like any employee whose employer-provided investment accounts have their terms suddenly changed for the worse, you'll have to decide how much that matters to you. I wonder how long the fiction of waiving the load can last, though. Surely if they charge the load to clients they will ultimately have to charge it to employees?

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Re: Need to find Loaded Index Funds

Postby lostdog » Tue Jun 20, 2017 7:01 am

I will answer your question in the interest of keeping you employed there. I would give up on the index funds and put them in loaded high cost active funds. If this job is slowly eating at you I would go find a fee only firm.

Now if it were me I would quit because it goes against my boglehead beliefs.
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Re: Need to find Loaded Index Funds

Postby nisiprius » Tue Jun 20, 2017 7:34 am

retiredjg wrote:
nisiprius wrote:Rydex offers an S&P 500 index fund, RYSOX, with a 4.75% load and a 1.55% expense ratio. It cannot possibly be a good option to pay a 1.55% expense ratio for an index fund, but it is indeed a loaded index fund.
Pretty awful. It would be better to use Class A American Funds.
Yes, I was thinking the same thing. I want to be cautious because I've never owned them myself and know them mostly by reputation, but their reputation is good. The expense ratios are not Vanguard-low but not exorbitant, they've been around a long time, they seem sensible, etc. I'm a dedicated indexer but there is no way I'd restrict myself to a short list of "index funds with loads," funds I've barely heard of, just because they are indexed. As you've probably noticed, there's a fair amount of talk in the forum and elsewhere to the effect that the benefits of indexing may be mainly due to low costs, and that sensibly-managed, low-cost active funds may be as good or even perhaps slightly better. The idea is that yes, managers really can add perhaps 0.5% of alpha, and the problem is not so much that they can't generate any alpha, it's that they keep it for themselves in the expenses they charge. I certainly would take American Funds Growth Fund of America over RYSOX, any day.
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Re: Need to find Loaded Index Funds

Postby retiredjg » Tue Jun 20, 2017 7:41 am

It appears you have the choice between using higher ER funds (index or actively managed) or pay trading costs for ETFs. It's a ridiculous choice, but no worse than many people have when their 401ks don't offer low cost index funds.

The American Funds generally receive good comments around here - the ERs are not low, but probably moderately low. The "problem" with American Funds is the load, which you would not have to pay.

If you choose ETFs, there is no reason you need to buy 10 funds, is there? That could be reduced to just a few if you are willing. You might have to drop a bell or whistle, but I'd be more concerned with costs.

ETA....seems like I was channelling my inner Nisiprius.... :happy

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Re: Need to find Loaded Index Funds

Postby whodidntante » Tue Jun 20, 2017 7:46 am

There are several closet index funds to choose from. Passive investing is not clearly better unless it's cheaper. You could buy contrafund advisor class I think, American Funds, or T. Rowe Price funds. But if I could buy a loaded fund with no load I would probably buy AQR long short equity.

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Re: Need to find Loaded Index Funds

Postby badger42 » Tue Jun 20, 2017 7:54 am

Why not just use ETFs and be a bit less picky about the slicing and dicing? Invest 5k or 10k at a time, and rebalance only if things are (say) 5k or 10k off? That should massively cut you commission expenses.

deltaneutral83
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Re: Need to find Loaded Index Funds

Postby deltaneutral83 » Tue Jun 20, 2017 7:59 am

So the OP has to buy loaded funds but the load is waived, but he gets charged commission to purchase the fund(s) each time? How much is the commission per buy?

AaronS
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Re: Need to find Loaded Index Funds

Postby AaronS » Tue Jun 20, 2017 8:00 am

lostdog wrote:I will answer your question in the interest of keeping you employed there. I would give up on the index funds and put them in loaded high cost active funds. If this job is slowly eating at you I would go find a fee only firm.

Now if it were me I would quit because it goes against my boglehead beliefs.


I don't put anyone in funds, I work in ops. These are my own personal retirement accounts, which I'm required to hold in-house.

Aaron

AaronS
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Re: Need to find Loaded Index Funds

Postby AaronS » Tue Jun 20, 2017 8:03 am

nisiprius wrote:
retiredjg wrote:
nisiprius wrote:Rydex offers an S&P 500 index fund, RYSOX, with a 4.75% load and a 1.55% expense ratio. It cannot possibly be a good option to pay a 1.55% expense ratio for an index fund, but it is indeed a loaded index fund.
Pretty awful. It would be better to use Class A American Funds.
Yes, I was thinking the same thing. I want to be cautious because I've never owned them myself and know them mostly by reputation, but their reputation is good. The expense ratios are not Vanguard-low but not exorbitant, they've been around a long time, they seem sensible, etc. I'm a dedicated indexer but there is no way I'd restrict myself to a short list of "index funds with loads," funds I've barely heard of, just because they are indexed. As you've probably noticed, there's a fair amount of talk in the forum and elsewhere to the effect that the benefits of indexing may be mainly due to low costs, and that sensibly-managed, low-cost active funds may be as good or even perhaps slightly better. The idea is that yes, managers really can add perhaps 0.5% of alpha, and the problem is not so much that they can't generate any alpha, it's that they keep it for themselves in the expenses they charge. I certainly would take American Funds Growth Fund of America over RYSOX, any day.


Thanks you for the feedback, and I agree with your assessment.

What are the preferred funds screeners out there that would help me in identifying quality managed funds that fit my desired allocation? Zacks?

AaronS
Posts: 15
Joined: Mon Jun 19, 2017 1:22 pm

Re: Need to find Loaded Index Funds

Postby AaronS » Tue Jun 20, 2017 8:21 am

retiredjg wrote:It appears you have the choice between using higher ER funds (index or actively managed) or pay trading costs for ETFs. It's a ridiculous choice, but no worse than many people have when their 401ks don't offer low cost index funds.

The American Funds generally receive good comments around here - the ERs are not low, but probably moderately low. The "problem" with American Funds is the load, which you would not have to pay.

If you choose ETFs, there is no reason you need to buy 10 funds, is there? That could be reduced to just a few if you are willing. You might have to drop a bell or whistle, but I'd be more concerned with costs.

ETA....seems like I was channelling my inner Nisiprius.... :happy


You have captured the issue correctly.

I will review American Funds' options, as a few have pointed me that way. If I do end up utilizing ETFs, I will consider dropping some funds as you mentioned. That a good point.

goingup
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Re: Need to find Loaded Index Funds

Postby goingup » Tue Jun 20, 2017 8:23 am

AaronS-
Several posters have said it. American Funds.

Here's a quote from Larry Swedroe last year about them:
American is very disciplined in sticking with their asset classes, no style drift, and low turnover and relatively low costs. So in some ways closer to passive than many active funds. Also don't rely on "star managers"--- and of course, like DFA and other well run passie shops they can avoid the negatives of pure indexing, including front running and forced trading and inclusion of all securities even when research shows they are best excluded (like lottery tickets). I used to own American funds before I became aware of DFA, for all these reasons.
Larry

We've held R6 shares American Funds Balanced for 10 years in a 401K. You'll want to look at A shares. Growth Fund of America might work for you.

AaronS
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Re: Need to find Loaded Index Funds

Postby AaronS » Tue Jun 20, 2017 9:19 am

deltaneutral83 wrote:So the OP has to buy loaded funds but the load is waived, but he gets charged commission to purchase the fund(s) each time? How much is the commission per buy?


You are correct in that I can no longer purchase no load funds per company policy. I do not get charged a commission on MF shares though. I would be charged a $21/trade commission on ETF transactions.

Many fund companies allow individuals within the industry to purchase their funds at NAV, which I could take advantage of. The reason I would buy class A shares is they typically carry the smallest 12B-1 fee, which I would still be responsible for paying.

Aaron

AaronS
Posts: 15
Joined: Mon Jun 19, 2017 1:22 pm

Re: Need to find Loaded Index Funds

Postby AaronS » Tue Jun 20, 2017 9:22 am

goingup wrote:AaronS-
Several posters have said it. American Funds.

Here's a quote from Larry Swedroe last year about them:
American is very disciplined in sticking with their asset classes, no style drift, and low turnover and relatively low costs. So in some ways closer to passive than many active funds. Also don't rely on "star managers"--- and of course, like DFA and other well run passie shops they can avoid the negatives of pure indexing, including front running and forced trading and inclusion of all securities even when research shows they are best excluded (like lottery tickets). I used to own American funds before I became aware of DFA, for all these reasons.
Larry

We've held R6 shares American Funds Balanced for 10 years in a 401K. You'll want to look at A shares. Growth Fund of America might work for you.


Well said, thank you and the many others who have pointed me to American Funds. I will reviewing their various funds to see what I can come up with.

retiredjg
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Re: Need to find Loaded Index Funds

Postby retiredjg » Tue Jun 20, 2017 10:09 am

There was a thread recently about reputable actively managed funds. In addition to American Funds, Dodge and Cox got some discussion.

Maybe they have something with a load to offer.

The irony of actually looking for a loaded fund....eye rolling smilie

livesoft
Posts: 55059
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Re: Need to find Loaded Index Funds

Postby livesoft » Tue Jun 20, 2017 10:22 am

AaronS wrote:What are the preferred funds screeners out there that would help me in identifying quality managed funds that fit my desired allocation? Zacks?

The one at your broker is the preferred fund screener.
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