Please advise re:Guggenheim intermediate bond fund class p SIUPX

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Luckygirl
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Please advise re:Guggenheim intermediate bond fund class p SIUPX

Post by Luckygirl » Tue Jun 12, 2018 6:40 pm

Fidelity advisor recommended this fund which I bought as part of my 401 rollover into IRA. I’m having second thoughts as ER is high (0.79) and this may go up. It had a net and gross (1.03%) ER. And it has 12b-1 fee of 0.25%. Returns don’t look too bad. Anyone have this fund, or would you recommend another Fidelity intermediate bond fund. Thanks. PS. This is my first post!

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David Jay
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Re: Please advise re:Guggenheim intermediate bond fund class p SIUPX

Post by David Jay » Tue Jun 12, 2018 8:51 pm

Welcome to the forum!

I don’t know Fidelity funds well enough to recommend a replacement, but I don’t think anyone around BH would recommend an intermediate term bond fund with a 1.03% expense ratio.

The 12b-1 fee is paid by the mutual fund company to the broker, so the advisor had a significant conflict of interest in recommending this product.
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius

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EyeYield
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Re: Please advise re:Guggenheim intermediate bond fund class p SIUPX

Post by EyeYield » Tue Jun 12, 2018 10:14 pm

Are you allowed to use anything Fidelity offers? If so, then shame on your Fidelity Advisor!

At Fidelity: iShares Core US Aggregate Bond ETF  AGG, will fill that space nicely. ER .05% - SEC yield 3.01% and much less volatile than the Guggenheim fund - compare the two at Morningstar and see how they stack up during 2008-2009.
This ETF can be bought/sold commission free at Fidelity.

Oh, and welcome to the forum. :sharebeer
"The stock market is a giant distraction from the business of investing." - Jack Bogle

pkcrafter
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Re: Please advise re:Guggenheim intermediate bond fund class p SIUPX

Post by pkcrafter » Tue Jun 12, 2018 10:30 pm

Luckygirl, SIUPX is a lower grade bond fund (BB) and that's why the recent returns look OK--higher risk. You should get higher returns for taking that risk. In 2008 the fund lost 11% while Vanguard Total Bond (AA) gained 5%. You have to decide if you want the higher risk in one of your bond funds.

Paul
When times are good, investors tend to forget about risk and focus on opportunity. When times are bad, investors tend to forget about opportunity and focus on risk.

Luckygirl
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Re: Please advise re:Guggenheim intermediate bond fund class p SIUPX

Post by Luckygirl » Wed Jun 13, 2018 8:04 am

Thanks for replies. I would prefer not to use etf. Does the Ishares Aggregate Fund come in a non etf fund?

PlateVoltage
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Re: Please advise re:Guggenheim intermediate bond fund class p SIUPX

Post by PlateVoltage » Wed Jun 13, 2018 8:33 am

FSITX - Fidelity® U.S. Bond Index Fund - Premium Class

not4me
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Re: Please advise re:Guggenheim intermediate bond fund class p SIUPX

Post by not4me » Wed Jun 13, 2018 8:54 am

David Jay wrote:
Tue Jun 12, 2018 8:51 pm
Welcome to the forum!

I don’t know Fidelity funds well enough to recommend a replacement, but I don’t think anyone around BH would recommend an intermediate term bond fund with a 1.03% expense ratio.

The 12b-1 fee is paid by the mutual fund company to the broker, so the advisor had a significant conflict of interest in recommending this product.
Please correct me if I'm wrong, but thought for the sake of the OP this should be explicitly clarified. What was said about the 12b-1 fee is correct as far as it goes, but a more precise way of saying it is: "The 12b-1 fee is paid by the investor through the mutual fund to the broker..."

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David Jay
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Re: Please advise re:Guggenheim intermediate bond fund class p SIUPX

Post by David Jay » Wed Jun 13, 2018 9:02 am

not4me wrote:
Wed Jun 13, 2018 8:54 am
David Jay wrote:
Tue Jun 12, 2018 8:51 pm
Welcome to the forum!

I don’t know Fidelity funds well enough to recommend a replacement, but I don’t think anyone around BH would recommend an intermediate term bond fund with a 1.03% expense ratio.

The 12b-1 fee is paid by the mutual fund company to the broker, so the advisor had a significant conflict of interest in recommending this product.
Please correct me if I'm wrong, but thought for the sake of the OP this should be explicitly clarified. What was said about the 12b-1 fee is correct as far as it goes, but a more precise way of saying it is: "The 12b-1 fee is paid by the investor through the mutual fund to the broker..."
True in the largest sense that all expenses are indirectly paid by the investor. I prefer to consider after-expense as the return for the investor and that is the method used by the industry.

My point was that the broker is being directly incentivized by the mutual fund company for recommending this fund.
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius

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EyeYield
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Re: Please advise re:Guggenheim intermediate bond fund class p SIUPX

Post by EyeYield » Wed Jun 13, 2018 9:09 am

Luckygirl wrote:
Wed Jun 13, 2018 8:04 am
Thanks for replies. I would prefer not to use etf. Does the Ishares Aggregate Fund come in a non etf fund?
Any low cost domestic total bond fund will get you there. As PlateVoltage mentioned FSITX, or if the 10k minimum is too high you can use FBIDX.
"The stock market is a giant distraction from the business of investing." - Jack Bogle

lack_ey
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Re: Please advise re:Guggenheim intermediate bond fund class p SIUPX

Post by lack_ey » Wed Jun 13, 2018 10:15 am

pkcrafter wrote:
Tue Jun 12, 2018 10:30 pm
Luckygirl, SIUPX is a lower grade bond fund (BB) and that's why the recent returns look OK--higher risk. You should get higher returns for taking that risk. In 2008 the fund lost 11% while Vanguard Total Bond (AA) gained 5%. You have to decide if you want the higher risk in one of your bond funds.

Paul
That's not really entirely the case. If you adjust for high yield exposure, it's still had positive alpha the last 10 years... though admittedly this is in part because some of the credit risk it takes likely does not really regress on high yield indexes (a lot of it is asset-backed securities, CMBS, non-agency MBS, rather than taking credit risk in corporate bonds as much, at least more recently). It's riskier but has done well over this period for that additional risk. It's not been like other funds that have returned more but would have been worse than some kind of mix like 60% total bond, 30% short-term investment-grade, 10% high yield. Some of the excess return is likely attributable to luck of course.

That said, management has changed significantly in the last 10 years, and older performance is not so great at all.




Given the cost, I would be skeptical, and frankly even if preferring active management would switch to something else cheaper. Without a clear investment philosophy and extensive analysis supporting some alternate route, I would say to default to the cheapest products where possible.

If you like the fund's risk exposure, you could use a combination of cheaper funds. A total bond index fund alone is heavier in term risk and significantly lighter in credit risk than this.

emlowe
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Re: Please advise re:Guggenheim intermediate bond fund class p SIUPX

Post by emlowe » Wed Jun 13, 2018 10:22 am

Just FYI that this SIUPX fund is currently a "Fidelity Fund Pick" (https://www.fidelity.com/fund-screener/fund-picks.shtml) - so her advisor recommending it is in keeping with that corporate line. They didn't go rogue recommending something random.

I'm not saying it's a good fund, because I don't think it is - but Fidelity "likes" it - at least this quarter. They change their minds often :-)

-Earle

not4me
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Re: Please advise re:Guggenheim intermediate bond fund class p SIUPX

Post by not4me » Wed Jun 13, 2018 11:11 am

David Jay wrote:
Wed Jun 13, 2018 9:02 am
not4me wrote:
Wed Jun 13, 2018 8:54 am
David Jay wrote:
Tue Jun 12, 2018 8:51 pm
Welcome to the forum!

I don’t know Fidelity funds well enough to recommend a replacement, but I don’t think anyone around BH would recommend an intermediate term bond fund with a 1.03% expense ratio.

The 12b-1 fee is paid by the mutual fund company to the broker, so the advisor had a significant conflict of interest in recommending this product.
Please correct me if I'm wrong, but thought for the sake of the OP this should be explicitly clarified. What was said about the 12b-1 fee is correct as far as it goes, but a more precise way of saying it is: "The 12b-1 fee is paid by the investor through the mutual fund to the broker..."
True in the largest sense that all expenses are indirectly paid by the investor. I prefer to consider after-expense as the return for the investor and that is the method used by the industry.

My point was that the broker is being directly incentivized by the mutual fund company for recommending this fund.
I think we're likely on the same page, but saying it differently. I agree the broker had incentive. I agree to look at "after-expense" (actually I use after tax ALSO). But 12b-1 is included in the expense to the investor, not something the mutual fund pays at of the goodness of their heart. In this case, the 12b-1 is part of the 1.03% ER that is applied to the investor balance. Maybe seen as semantics by some, but just as real & direct as any other part of the expense.

dbr
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Re: Please advise re:Guggenheim intermediate bond fund class p SIUPX

Post by dbr » Wed Jun 13, 2018 11:25 am

I would wonder why you are talking to an advisor at Fidelity. Are you paying a fee for advice or was this just a one-off conversation? Do you feel you need advice, paid for or not? It is entirely possible to hold accounts at Fidelity and not have to talk to anyone who suggests what you should or should not buy. Fidelity is a risky brokerage from the point of view that they can sell you things you don't want if you let them. This may be a case in point.

In any case you can buy Fidelity bond funds or other bond funds in a Fidelity account and end up with something lower cost and more suitable to your needs.

Luckygirl
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Re: Please advise re:Guggenheim intermediate bond fund class p SIUPX

Post by Luckygirl » Wed Jun 13, 2018 11:57 am

I rolled my 401 plans into IRA at Fidelity. I wasn’t sure what bond fund to get into, so I asked the guy helping me what he suggested. I should have done more research before I purchased. I’ve only had the Guggenheim funds for about two months, but I’m concerned about the high ER that will go even higher once the “discount” (net) goes away and I am charged the higher gross ER.

Luckygirl
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Re: Please advise re:Guggenheim intermediate bond fund class p SIUPX

Post by Luckygirl » Wed Jun 13, 2018 11:59 am

PS. I am not paying him as an advisor. I did want help picking bond fund. I already knew the other funds I wanted.

not4me
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Re: Please advise re:Guggenheim intermediate bond fund class p SIUPX

Post by not4me » Wed Jun 13, 2018 12:49 pm

Luckygirl wrote:
Wed Jun 13, 2018 11:57 am
I rolled my 401 plans into IRA at Fidelity. I wasn’t sure what bond fund to get into, so I asked the guy helping me what he suggested. I should have done more research before I purchased. I’ve only had the Guggenheim funds for about two months, but I’m concerned about the high ER that will go even higher once the “discount” (net) goes away and I am charged the higher gross ER.
The way I read your initial post, the net & gross expense ratios were the same. Sounds like they aren't currently. Expense ratios can & do change over time, but you can find out the current plan by checking out the web site for the fund. You'll need to know which series of the fund you have & then look for a footnote explaining the difference in the net & gross. Usually, there will be something like the advisor is waiving until at least Month/day/year, etc....That might help you know how much time you have to switch, how much it would go up, etc. Might want to be sure that you won't get hit with a fee for switching out too quickly.

Jack FFR1846
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Re: Please advise re:Guggenheim intermediate bond fund class p SIUPX

Post by Jack FFR1846 » Wed Jun 13, 2018 1:03 pm

What other bond funds are available in your 401k?

Or to back up even farther, what other accounts do you have and what is in each?

I think you might want to do a full profile like this: viewtopic.php?f=1&t=6212

I also use Fidelity for my 401k and have looked over all the available funds. While I like Fidelity a lot, out of the funds available to me, there is exactly one that is great. The rest are total crap.

I also have a large IRA with Fidelity along with other family money. I find Fidelity support people top notch. Walking into a Fidelity branch with a problem filling out a form (from some other company) is met with careful study, help filling it out and notarizations without even asking. But to the Private Client manager assigned to me, I am "that indexing guy". I wouldn't take advice from him never, ever. I understand very well that his goal isn't to maximize my returns but to earn extra to justify his existence within Fidelity.

In my IRA, I use FSITX, total US bond. I expect it's sort of like the fund you're looking at but more diverse and way cheaper at 0.045%. Of course it's a ntf fund and there's no stupid load or 12b-1 fees.
Bogle: Smart Beta is stupid

dbr
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Re: Please advise re:Guggenheim intermediate bond fund class p SIUPX

Post by dbr » Wed Jun 13, 2018 1:37 pm

This is an example where the advice may actually be more harmful than not getting any advice at all. That doesn't mean the harm is terrible, but it is unlikely a low quality bond fund is what the investor wants and the cost is too high. It is entirely possible for this to happen at Fidelity if the investor allows it to.

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