USAA getting out of mutual fund biz

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
User avatar
Topic Author
Riprap
Posts: 437
Joined: Thu Jan 29, 2009 2:08 pm

USAA getting out of mutual fund biz

Post by Riprap » Tue Nov 06, 2018 10:11 pm

In an email from USAA...

"USAA is pleased to select Victory Capital, an investment industry leader, to acquire the USAA Asset Management Company, which includes our Mutual Fund and ETF businesses as well as the USAA 529 College Savings Plan."

I have a small amount in USAA's muni bond funds and money market fund. I have my reasons, however irrational they may be. That said, anyone ever hear of Victory Capital before? Seems like USAA is doing the membership a favor by getting out of a business they really aren't that competitive in anymore.

Might be time to go 100% Vanguard.

LarryAllen
Posts: 1142
Joined: Fri Apr 22, 2016 9:41 am
Location: State of Confusion

Re: USAA getting out of mutual fund biz

Post by LarryAllen » Tue Nov 06, 2018 10:14 pm

That's surprising but I trust USAA so it shows to me that they realized they couldn't reinvent the wheel. Never heard of Victory.

User avatar
White Coat Investor
Posts: 13923
Joined: Fri Mar 02, 2007 9:11 pm
Location: Greatest Snow On Earth

Re: USAA getting out of mutual fund biz

Post by White Coat Investor » Tue Nov 06, 2018 10:20 pm

One more reason not to invest at USAA.
1) Invest you must 2) Time is your friend 3) Impulse is your enemy | 4) Basic arithmetic works 5) Stick to simplicity 6) Stay the course

gwrvmd
Posts: 814
Joined: Wed Dec 02, 2009 8:34 pm
Location: Calabash NC

Re: USAA getting out of mutual fund biz

Post by gwrvmd » Tue Nov 06, 2018 10:28 pm

I have been and am a very loyal USAA client for 40 years. Their insurance is great but their mutual funds are not very good
Get your investments from an investment company and your insurance from an insurance company

Don't get your investments from an insurance company..........Gordon
I have followed mutual fund companies quite closely since I bought my first one from Vanguard in 1978. I have never heard of Victory Capital
Disciple of John Neff

rgramma
Posts: 5
Joined: Tue Nov 06, 2018 10:49 pm

Re: USAA getting out of mutual fund biz

Post by rgramma » Tue Nov 06, 2018 10:53 pm

My understanding is that it will not affect their brokerage business. They use Fidelity NFS for clearing services, so all Fidelity funds, including their index funds, should still be available commission free on their platform.

danaht
Posts: 590
Joined: Sun Oct 18, 2015 11:28 am

Re: USAA getting out of mutual fund biz

Post by danaht » Tue Nov 06, 2018 11:00 pm

That's too bad. Here is my plan:

1) sell my USAA S&P 500 mutual fund in the first quarter of next year (before the fund transfers to Victory) and
2) open a USAA brokerage account and buy the VOO ETF with the funds.

I only have ~$2000 in unrealized gains for this - so no big deal. Also, according to the press release USAA's brokerage business is not transferring to Victory.
Other posters have mentioned that $500 or more in ETFs will still qualify as a multi-product discount. The only reason I had this account was to get the multi-product discount.

student
Posts: 3225
Joined: Fri Apr 03, 2015 6:58 am

Re: USAA getting out of mutual fund biz

Post by student » Tue Nov 06, 2018 11:23 pm

Riprap wrote:
Tue Nov 06, 2018 10:11 pm
That said, anyone ever hear of Victory Capital before?
No. Took a quick look. Not impressed.

columbia
Posts: 1554
Joined: Tue Aug 27, 2013 5:30 am

Re: USAA getting out of mutual fund biz

Post by columbia » Wed Nov 07, 2018 6:58 am

My first IRA was with USAA - and then I learned about the tyranny of fees.

User avatar
vineviz
Posts: 4008
Joined: Tue May 15, 2018 1:55 pm

Re: USAA getting out of mutual fund biz

Post by vineviz » Wed Nov 07, 2018 7:42 am

Riprap wrote:
Tue Nov 06, 2018 10:11 pm
I have a small amount in USAA's muni bond funds and money market fund. I have my reasons, however irrational they may be. That said, anyone ever hear of Victory Capital before? Seems like USAA is doing the membership a favor by getting out of a business they really aren't that competitive in anymore.
Victory is more of a conglomerate than a consolidator: aside from providing some back-office support, they tend to let the investment managers they acquire keep doing what they've been doing. You can expect, barring some future announcement, your funds to continue being managed the same way they've been managed if history is any guide.
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." ~~ Peter Lynch

Soon2BXProgrammer
Posts: 612
Joined: Mon Nov 24, 2014 11:30 pm

Re: USAA getting out of mutual fund biz

Post by Soon2BXProgrammer » Wed Nov 07, 2018 9:11 am

danaht wrote:
Tue Nov 06, 2018 11:00 pm
That's too bad. Here is my plan:

1) sell my USAA S&P 500 mutual fund in the first quarter of next year (before the fund transfers to Victory) and
2) open a USAA brokerage account and buy the VOO ETF with the funds.

I only have ~$2000 in unrealized gains for this - so no big deal. Also, according to the press release USAA's brokerage business is not transferring to Victory.
Other posters have mentioned that $500 or more in ETFs will still qualify as a multi-product discount. The only reason I had this account was to get the multi-product discount.
i have a brokerage account and just have 500 in my sweep fund. (which is a USAA Money market, i don't remember which one).. trying to figure out what this means.. if they are selling/paying Victory to take all the mutual funds

azanon
Posts: 2360
Joined: Mon Nov 07, 2011 10:34 am
Location: Little Rock, AR
Contact:

Re: USAA getting out of mutual fund biz

Post by azanon » Wed Nov 07, 2018 9:17 am

columbia wrote:
Wed Nov 07, 2018 6:58 am
My first IRA was with USAA - and then I learned about the tyranny of fees.
This. Although I do remember making over 100% one year in USAA Aggressive Growth Fund though (late 90s, i forget the exact year).

TJH_10003
Posts: 1
Joined: Mon Jan 16, 2017 11:48 pm
Location: New York

Re: USAA getting out of mutual fund biz

Post by TJH_10003 » Wed Nov 07, 2018 11:46 am

I've been a USAA member for 42 years. They had a great reputation for service, but in recent years they seem have become a marketing enterprise. Like everyone else in the financial business, they have moved to the Internet and automated many processes. That last part they have not done very well. The few people who remain are often not well trained or well informed.

I'll probably stay with USAA for some insurance and maybe banking. But it's time to move the investments to Vanguard.

User avatar
Taz
Posts: 362
Joined: Tue Jan 13, 2009 9:10 am
Location: Florida

Re: USAA getting out of mutual fund biz

Post by Taz » Thu Nov 08, 2018 7:22 am

I closed out my largely ignored brokerage account with them this spring by transferring an index EFT (CWI) with gains to start a small Fidelity donor advised fund. The account really served no purpose as everything else was at Vanguard and the TSP.
The destination matters.

typical.investor
Posts: 864
Joined: Mon Jun 11, 2018 3:17 am

Re: USAA getting out of mutual fund biz

Post by typical.investor » Thu Nov 08, 2018 8:20 am

Their ETFs seem kinda funky...
VictoryShares is a specialist ETF provider with a focus on rules-based solutions that seek to bridge the gap between active and passive. The VictoryShares ETF product line includes single- and multi-factor strategies designed to seek a variety of outcomes, including maximum diversification, dividend income, and downside mitigation.
The Long/Cash Index tactically reduces its exposure to the equity markets during periods of significant market declines and reinvests when market prices have further declined or rebounded. The Nasdaq Victory US Large Cap 500 Long/Cash Volatility Weighted Index is based on the month-end price of the Nasdaq Victory US Large Cap 500 Volatility Weighted Index (the “Reference Index”).

dharrythomas
Posts: 933
Joined: Tue Jun 19, 2007 4:46 pm

Re: USAA getting out of mutual fund biz

Post by dharrythomas » Fri Nov 09, 2018 4:36 pm

We started investing with USAA years ago, but then they started market timid with their funds and raised their fees significantly so we moved to Vanguard. I think the last move was 2001.

Still use them for banking and insurance. They've got the same problem with rapid expansion that Vanguard has had. Initially they just serviced officers, then they added children, then they added enlisted so they increased their potential customers by several orders of magnitude.

The bank and insurance are good for the customer, the mutual funds are a profit center, I think the S&P500 expense ratio is 0.5%. They couldn't achieve the economies of scale to have competitive rates.

brokenrecord
Posts: 40
Joined: Sun Sep 30, 2018 8:25 pm

Re: USAA getting out of mutual fund biz

Post by brokenrecord » Fri Nov 09, 2018 4:48 pm

columbia wrote:
Wed Nov 07, 2018 6:58 am
My first IRA was with USAA - and then I learned about the tyranny of fees.
Same. They were always a square peg.

brokenrecord
Posts: 40
Joined: Sun Sep 30, 2018 8:25 pm

Re: USAA getting out of mutual fund biz

Post by brokenrecord » Fri Nov 09, 2018 4:51 pm

TJH_10003 wrote:
Wed Nov 07, 2018 11:46 am
I've been a USAA member for 42 years. They had a great reputation for service, but in recent years they seem have become a marketing enterprise. Like everyone else in the financial business, they have moved to the Internet and automated many processes. That last part they have not done very well. The few people who remain are often not well trained or well informed.

I'll probably stay with USAA for some insurance and maybe banking. But it's time to move the investments to Vanguard.
I’ve noticed the same. I married into USAA so I was never fully bought in. Their customer service has been declining over the last couple of years IMO. To your point, probably due to lack of training.

MBB_Boy
Posts: 48
Joined: Sat May 12, 2018 4:09 pm

Re: USAA getting out of mutual fund biz

Post by MBB_Boy » Sat Nov 10, 2018 11:24 am

brokenrecord wrote:
Fri Nov 09, 2018 4:51 pm
TJH_10003 wrote:
Wed Nov 07, 2018 11:46 am
I've been a USAA member for 42 years. They had a great reputation for service, but in recent years they seem have become a marketing enterprise. Like everyone else in the financial business, they have moved to the Internet and automated many processes. That last part they have not done very well. The few people who remain are often not well trained or well informed.

I'll probably stay with USAA for some insurance and maybe banking. But it's time to move the investments to Vanguard.
I’ve noticed the same. I married into USAA so I was never fully bought in. Their customer service has been declining over the last couple of years IMO. To your point, probably due to lack of training.
Really? They are still top ranked, by far, in all the rankings for customer service and member satisfaction.

Then again, most banks are simply terrible....so it's possible they have been declining but are still top of class!

Gnirk
Posts: 950
Joined: Sun Sep 09, 2012 3:11 am
Location: Western Washington

Re: USAA getting out of mutual fund biz

Post by Gnirk » Sat Nov 10, 2018 7:08 pm

Hmmm. I inherited shares of their tax exempt funds, and have kept them at USAA. I also inherited Vanguard funds held at Vanguard. As the executor of the estate I found USAA to be far better, faster, and more courteous in handling the transition of the accounts to the beneficiaries than Vanguard was. This is the only area where I find Vanguard really sucks.

User avatar
celia
Posts: 9360
Joined: Sun Mar 09, 2008 6:32 am
Location: SoCal

Re: USAA getting out of mutual fund biz

Post by celia » Sat Nov 10, 2018 7:22 pm

Gnirk wrote:
Sat Nov 10, 2018 7:08 pm
Hmmm. I inherited shares of their tax exempt funds, and have kept them at USAA. I also inherited Vanguard funds held at Vanguard. As the executor of the estate I found USAA to be far better, faster, and more courteous in handling the transition of the accounts to the beneficiaries than Vanguard was. This is the only area where I find Vanguard really sucks.
Gnirk, Were you a client of Vanguard before you inherited funds being held there?

I was a trustee for someone who already had accounts at Vanguard before they died. I found Vanguard was very helpful and easy to work with to get the assets divided and re-titled. (There were no retirement accounts in this case, just taxable.)

Big Dog
Posts: 1129
Joined: Mon Sep 07, 2015 4:12 pm

Re: USAA getting out of mutual fund biz

Post by Big Dog » Sat Nov 10, 2018 10:13 pm

Seems like USAA is doing the membership a favor by getting out of a business they really aren't that competitive in anymore.
They haven't been competitive for years. I'm a big fan of the company, and have been a member for (next month) 40 years, but now only for insurances. Used to have the USAA credit card, banking services, and investments accounts (IRA's), but I'm generally cheap and would rather pay less in fees, so I dropped all but insurance years ago.

Gnirk
Posts: 950
Joined: Sun Sep 09, 2012 3:11 am
Location: Western Washington

Re: USAA getting out of mutual fund biz

Post by Gnirk » Sun Nov 11, 2018 12:46 am

celia wrote:
Sat Nov 10, 2018 7:22 pm
Gnirk wrote:
Sat Nov 10, 2018 7:08 pm
Hmmm. I inherited shares of their tax exempt funds, and have kept them at USAA. I also inherited Vanguard funds held at Vanguard. As the executor of the estate I found USAA to be far better, faster, and more courteous in handling the transition of the accounts to the beneficiaries than Vanguard was. This is the only area where I find Vanguard really sucks.
Gnirk, Were you a client of Vanguard before you inherited funds being held there?

I was a trustee for someone who already had accounts at Vanguard before they died. I found Vanguard was very helpful and easy to work with to get the assets divided and re-titled. (There were no retirement accounts in this case, just taxable.)
Yes, I had been a client for 10 years, and my mom for a much longer time. These were taxable accounts, in a living trust with my brother and I as equal beneficiaries. Among other things, the woman who was in charge of the transitioning claimed, on two separate occasions, not to have received documents even though they were signed for each time.

Otherwise, the customer service I have experienced at Vanguard has been wonderful!
I had not been a client of USAA.
Last edited by Gnirk on Sun Nov 11, 2018 1:01 pm, edited 1 time in total.

MtPisgah
Posts: 1
Joined: Wed Jul 04, 2018 8:30 pm

Re: USAA getting out of mutual fund biz

Post by MtPisgah » Sun Nov 11, 2018 7:29 am

I have been a USAA member for 25 years and have always been happy with their service. I have four investment accounts with them but have never held any USAA funds, mainly Vanguard. I suppose I should open a Vanguard account but it is easier for me to have everything in one place.

columbia
Posts: 1554
Joined: Tue Aug 27, 2013 5:30 am

Re: USAA getting out of mutual fund biz

Post by columbia » Sun Nov 11, 2018 8:06 am

Big Dog wrote:
Sat Nov 10, 2018 10:13 pm
Seems like USAA is doing the membership a favor by getting out of a business they really aren't that competitive in anymore.
They haven't been competitive for years. I'm a big fan of the company, and have been a member for (next month) 40 years, but now only for insurances. Used to have the USAA credit card, banking services, and investments accounts (IRA's), but I'm generally cheap and would rather pay less in fees, so I dropped all but insurance years ago.
I like my 2.5% cash back (on all purchases) credit card from USAA. My auto policy is pretty reasonable, too.

MDCrab
Posts: 19
Joined: Mon May 07, 2018 4:39 pm

Re: USAA getting out of mutual fund biz

Post by MDCrab » Sun Nov 11, 2018 8:21 am

I have USAA for insurance, which is great. I have USAA for banking, which is also great. And I have a USAA brockerage, which mostly holds commission-free Fidelity funds. I don’t see any reason to change any of that.

User avatar
corn18
Posts: 1392
Joined: Fri May 22, 2015 6:24 am

Re: USAA getting out of mutual fund biz

Post by corn18 » Sun Nov 11, 2018 10:52 am

MDCrab wrote:
Sun Nov 11, 2018 8:21 am
I have USAA for insurance, which is great. I have USAA for banking, which is also great. And I have a USAA brockerage, which mostly holds commission-free Fidelity funds. I don’t see any reason to change any of that.
This is me as well. For some reason, I always get the best rates for insurance from them. The online banking is good. 2.5% cash back VISA is great. Rates are terrible. Brokerage works great to trade FIDO funds. It also makes life easy for my wife if I die. Everything except the 401k is at USAA.
Don't do something, just stand there!

NYnative
Posts: 418
Joined: Thu Mar 01, 2007 10:41 am

Re: USAA getting out of mutual fund biz

Post by NYnative » Sun Nov 11, 2018 11:19 am

"Really? They are still top ranked, by far, in all the rankings for customer service and member satisfaction."

Yes - for insurance. I've been with them since I was in ROTC. But for life, home and car insurance only. That's why they were created - to provide insurance for the military with no war clause. Very few other companies (other than ones specifically for the military) offer that, which means they are useless if you are killed in combat or by an act of war.

I still remember their early ads - 3 out of 10 officers insure with USAA, then it was 5 out of 10, eventually 9 out of 10. After that, they stopped mentioning it. They were running out of prospective members, so they first opened the field of membership to military children, then senior NCOs, then lower enlisted ranks. I have no idea where they go from here. Eventually, they will run out of possible new members. I guess the decision then is to open it up for everyone and just become a regular insurance company or recognize that there are limits to growth.

One reason their car insurance rates were really great in comparison to everyone else in the past was that their membership was limited to military officers, who, compared to the general public, had a much lower accident rate. They were especially cheap when stationed overseas. With their field of membership so wide now, their rates can be beat by some companies. But I am sticking with them until I see such a large gap in prices that it's no longer worthwhile. Service has always been fantastic for the insurance I have. Never tried investments or banking with them, as they are really neither a bank nor an investment company.

DownToThis
Posts: 21
Joined: Mon Jan 01, 2018 8:47 pm

Re: USAA getting out of mutual fund biz

Post by DownToThis » Sun Nov 11, 2018 11:24 am

I have their target date fund (I think the ER is 0.78). I've had it for a while now and have thought about getting out of it but part of me feels like I don't want to pay the capital gains. I guess this might be an incentive to move it if this new company is taking it over

Soon2BXProgrammer
Posts: 612
Joined: Mon Nov 24, 2014 11:30 pm

Re: USAA getting out of mutual fund biz

Post by Soon2BXProgrammer » Sun Nov 11, 2018 11:37 am

NYnative wrote:
Sun Nov 11, 2018 11:19 am
"Really? They are still top ranked, by far, in all the rankings for customer service and member satisfaction."

Yes - for insurance. I've been with them since I was in ROTC. But for life, home and car insurance only. That's why they were created - to provide insurance for the military with no war clause. Very few other companies (other than ones specifically for the military) offer that, which means they are useless if you are killed in combat or by an act of war.

I still remember their early ads - 3 out of 10 officers insure with USAA, then it was 5 out of 10, eventually 9 out of 10. After that, they stopped mentioning it. They were running out of prospective members, so they first opened the field of membership to military children, then senior NCOs, then lower enlisted ranks. I have no idea where they go from here. Eventually, they will run out of possible new members. I guess the decision then is to open it up for everyone and just become a regular insurance company or recognize that there are limits to growth.

One reason their car insurance rates were really great in comparison to everyone else in the past was that their membership was limited to military officers, who, compared to the general public, had a much lower accident rate. They were especially cheap when stationed overseas. With their field of membership so wide now, their rates can be beat by some companies. But I am sticking with them until I see such a large gap in prices that it's no longer worthwhile. Service has always been fantastic for the insurance I have. Never tried investments or banking with them, as they are really neither a bank nor an investment company.

price depends on what company you end up getting insured through. if you are in the top tier.. (i.e. have a Subscribers Savings Account), yes, then rates are hard to beat.

NYnative
Posts: 418
Joined: Thu Mar 01, 2007 10:41 am

Re: USAA getting out of mutual fund biz

Post by NYnative » Sun Nov 11, 2018 3:20 pm

"price depends on what company you end up getting insured through. if you are in the top tier.. (i.e. have a Subscribers Savings Account), yes, then rates are hard to beat."

I agree. I am in that tier.

User avatar
Raymond
Posts: 1392
Joined: Mon Apr 16, 2012 6:04 am
Location: Texas

Re: USAA getting out of mutual fund biz

Post by Raymond » Sun Nov 11, 2018 3:48 pm

I've been a USAA member for over thirty years - insurance and banking.

Transferred what little I had with them in mutual funds and individual stocks over to Vanguard about ten years ago, never looked back.
"Ritter, Tod und Teufel"

User avatar
Nords
Posts: 217
Joined: Sun May 20, 2007 9:55 pm
Location: Oahu
Contact:

Re: USAA getting out of mutual fund biz

Post by Nords » Sat Nov 17, 2018 4:10 pm

NYnative wrote:
Sun Nov 11, 2018 11:19 am
I still remember their early ads - 3 out of 10 officers insure with USAA, then it was 5 out of 10, eventually 9 out of 10. After that, they stopped mentioning it. They were running out of prospective members, so they first opened the field of membership to military children, then senior NCOs, then lower enlisted ranks. I have no idea where they go from here. Eventually, they will run out of possible new members. I guess the decision then is to open it up for everyone and just become a regular insurance company or recognize that there are limits to growth.
Today's membership eligibility is "All who served honorably, and their families." Of course anyone can use their investments.
https://www.usaa.com/inet/wc/why_choose_usaa_main?wa_ref=pub_global_usaaandu

USAA estimates their total eligible member population at 66M, and they're right around 12M now. That's grown from about 8M in 2011, so this rate should be sustainable for a few more decades.
* | * | Please see my profile. I don't read every post, so please PM or e-mail me to get my attention.

tj
Posts: 2382
Joined: Thu Dec 24, 2009 12:10 am

Re: USAA getting out of mutual fund biz

Post by tj » Sat Nov 17, 2018 9:20 pm

Soon2BXProgrammer wrote:
Sun Nov 11, 2018 11:37 am
NYnative wrote:
Sun Nov 11, 2018 11:19 am
"Really? They are still top ranked, by far, in all the rankings for customer service and member satisfaction."

Yes - for insurance. I've been with them since I was in ROTC. But for life, home and car insurance only. That's why they were created - to provide insurance for the military with no war clause. Very few other companies (other than ones specifically for the military) offer that, which means they are useless if you are killed in combat or by an act of war.

I still remember their early ads - 3 out of 10 officers insure with USAA, then it was 5 out of 10, eventually 9 out of 10. After that, they stopped mentioning it. They were running out of prospective members, so they first opened the field of membership to military children, then senior NCOs, then lower enlisted ranks. I have no idea where they go from here. Eventually, they will run out of possible new members. I guess the decision then is to open it up for everyone and just become a regular insurance company or recognize that there are limits to growth.

One reason their car insurance rates were really great in comparison to everyone else in the past was that their membership was limited to military officers, who, compared to the general public, had a much lower accident rate. They were especially cheap when stationed overseas. With their field of membership so wide now, their rates can be beat by some companies. But I am sticking with them until I see such a large gap in prices that it's no longer worthwhile. Service has always been fantastic for the insurance I have. Never tried investments or banking with them, as they are really neither a bank nor an investment company.

price depends on what company you end up getting insured through. if you are in the top tier.. (i.e. have a Subscribers Savings Account), yes, then rates are hard to beat.
I'll never understand how they come up with their rates for the different tiers. I'm in what I've heard is the "3rd generation" tier (Garrison Property & Casualty Insurance Company) and nobody can touch USAA rates for me. My parents are in the 2nd tier, USAA Casualty Insurance Company, and they say that USAA is not competitive for them. They've had Allstate for multiple decades.

User avatar
flamesabers
Posts: 1789
Joined: Fri Mar 03, 2017 12:05 pm
Location: Rochester, MN

Re: USAA getting out of mutual fund biz

Post by flamesabers » Sat Nov 17, 2018 10:05 pm

columbia wrote:
Sun Nov 11, 2018 8:06 am
I like my 2.5% cash back (on all purchases) credit card from USAA.
Same here. It's one of my most used credit cards.

kaydubya
Posts: 7
Joined: Tue May 01, 2018 9:31 am
Location: Arlington, VA

Re: USAA getting out of mutual fund biz

Post by kaydubya » Tue Nov 20, 2018 12:38 pm

Like many of you, I am still a big fan of USAA. I've been with them for close to 30 years and bank, insure and invest with them. The latter i did primarily to keep all my assets under one roof. I was willing to pay USAA a premium in fees for convenience and aggregation. Now that they've sold their investment arm to Victory Capital (who are these people? nobody seems to know), not only am I mad sick about it, I'm determined to take my investment portfolio to Vanguard or Fidelity. My challenge is I have a fairly sizable taxable account with a low 6-figure unrealized LT gain. Even at 15%, that is a stiff penalty to pay if I have to sell to move these assets. Neither Fidelity or Vanguard can accept USAA mutual funds "in kind". I'm torn. I hate leaving a sizable chunk of my taxable assets with USAA (soon to be Victory), but I can't imagine triggering such a tax bill just to move away from USAA out of spite and disappointment.

User avatar
corn18
Posts: 1392
Joined: Fri May 22, 2015 6:24 am

Re: USAA getting out of mutual fund biz

Post by corn18 » Tue Nov 20, 2018 1:38 pm

kaydubya wrote:
Tue Nov 20, 2018 12:38 pm
Like many of you, I am still a big fan of USAA. I've been with them for close to 30 years and bank, insure and invest with them. The latter i did primarily to keep all my assets under one roof. I was willing to pay USAA a premium in fees for convenience and aggregation. Now that they've sold their investment arm to Victory Capital (who are these people? nobody seems to know), not only am I mad sick about it, I'm determined to take my investment portfolio to Vanguard or Fidelity. My challenge is I have a fairly sizable taxable account with a low 6-figure unrealized LT gain. Even at 15%, that is a stiff penalty to pay if I have to sell to move these assets. Neither Fidelity or Vanguard can accept USAA mutual funds "in kind". I'm torn. I hate leaving a sizable chunk of my taxable assets with USAA (soon to be Victory), but I can't imagine triggering such a tax bill just to move away from USAA out of spite and disappointment.
I would call USAA and see if they know anything yet. There should be a proxy statement published by USAA that describes the terms of the sale. There should be a change of control statement somewhere in USAA's docs now, but I can't find one. Maybe there will be an option to do a transfer in kind to a non-USAA fund as a one time option for current USAA fund holders.
Don't do something, just stand there!

Soon2BXProgrammer
Posts: 612
Joined: Mon Nov 24, 2014 11:30 pm

Re: USAA getting out of mutual fund biz

Post by Soon2BXProgrammer » Tue Nov 20, 2018 1:42 pm

also from a conversation with someone at USAA (just a worker, so take this with a grain of salt).. it sounded liked in a way they thought victory capitol could service those mutual funds better then USAA did.

I would think people should start to limit their exposure (turn off dividend reinvest, TLH, donate through a DAF), but not panic, especially if they are invested in an index fund..

victory capitol has scale that USAA didn't, so it is hard to say how their funds will be impacted.

User avatar
Nords
Posts: 217
Joined: Sun May 20, 2007 9:55 pm
Location: Oahu
Contact:

Re: USAA getting out of mutual fund biz

Post by Nords » Tue Nov 20, 2018 4:28 pm

kaydubya wrote:
Tue Nov 20, 2018 12:38 pm
I was willing to pay USAA a premium in fees for convenience and aggregation. Now that they've sold their investment arm to Victory Capital (who are these people? nobody seems to know), not only am I mad sick about it, I'm determined to take my investment portfolio to Vanguard or Fidelity. My challenge is I have a fairly sizable taxable account with a low 6-figure unrealized LT gain. Even at 15%, that is a stiff penalty to pay if I have to sell to move these assets. Neither Fidelity or Vanguard can accept USAA mutual funds "in kind". I'm torn. I hate leaving a sizable chunk of my taxable assets with USAA (soon to be Victory), but I can't imagine triggering such a tax bill just to move away from USAA out of spite and disappointment.
KayDubya, USAA is still going to provide the member service reps to answer questions and handle requests. You'll still be invested in the same USAA funds (and ticker symbols) that you're invested in today, and (just like any other mutual fund) you'll have plenty of notice if a fund manager steps down. If an index fund changes its benchmark then you'll have plenty of notice of that too.

One change is the behind-the-scenes back-office execution of trades, the record-keeping, the reporting, the auditing, and the compliance. Victory will be handling all of that, and it'll probably cost less money for them to do it than for USAA to do it. Victory might even do a better job of marketing the USAA funds to other investors, which would grow the size of the funds and spread out the fixed cost of running the funds to cost less per share. Part of the sale contract with USAA is an incentive for Victory to pass on those savings to the USAA investors in the form of lower expense ratios.

In other words, you'll still have that convenience & aggregation. That might be more of a reason to leave your shares as they are instead of transferring away from USAA/Victory. I realize that Fidelity & Vanguard have told you that they won't accept the funds in kind. Will they custody the shares for you with the understanding that they won't have to execute any future buy orders from you for those tickers?

It's quite possible that USAA's investment branch has been struggling around in the red for a few years and costing the members money while the company tried to find a buyer (like Victory). It'll be interesting to see whether the members with Subscriber Accounts get a little bump in distributions at the end of this year or the end of 2019.
* | * | Please see my profile. I don't read every post, so please PM or e-mail me to get my attention.

kaydubya
Posts: 7
Joined: Tue May 01, 2018 9:31 am
Location: Arlington, VA

Re: USAA getting out of mutual fund biz

Post by kaydubya » Tue Nov 20, 2018 8:03 pm

You all bring up great points I hadn't considered. I'll give them a call after the holidays to see how they answer them. This is my first time using this forum. You all are supremely helpful. Thank you.

gtwhitegold
Posts: 422
Joined: Fri Sep 21, 2012 1:55 pm

Re: USAA getting out of mutual fund biz

Post by gtwhitegold » Wed Nov 21, 2018 8:21 am

My biggest concern would be if they tried to change up the staff after the handover, but it doesn't appear that they will. I'm still interested in the Value/Momentum Blend ETFs to use as rebalancing partners with other tilted funds, but I don't need to yet since I'm still trying to maximize my tax advantaged space.

shawcroft
Posts: 927
Joined: Sun Feb 24, 2008 4:18 pm
Location: Connecticut

USAA getting out of mutual fund biz

Post by shawcroft » Tue Mar 05, 2019 12:47 pm

Just got the proxy package for the sale of USAA mutual funds to Victory Capital.(I have a small amount in their Tax-Exempt MMF which qualified me for a proxy vote)
The basic sale price is $850 million..with some additional performance bells and whistles. If approved, the transaction would close late in the second quarter. Not much is supposed to change in the first two years. After that, all bets are off.
Like others, I primarily use USAA for insurance and have been pleased with their offerings. I also have a checking account with them and a Visa credit card. My traditional IRA was with them for several years but is now happily at Vanguard.
Looks like USAA figured out they could not compete in the mutual fund area. Perhaps the USAA funds acquisition will give Victory Capital more critical mass. A lot can happen in two years.
Shawcroft

User avatar
marti038
Posts: 135
Joined: Tue Mar 21, 2017 3:45 pm
Location: Birmingham, AL

Re: USAA getting out of mutual fund biz

Post by marti038 » Tue Mar 05, 2019 1:45 pm

We left USAA in 2014 and went totally to Vanguard simply because of the expense ratios on their funds. We had no complaints, they just weren't as competitive.

We still have all of our insurance with them and continue to be pleased with the service.

CompareContrast
Posts: 33
Joined: Sun Sep 05, 2010 9:08 pm

Re: USAA getting out of mutual fund biz

Post by CompareContrast » Wed Apr 10, 2019 2:47 pm

USAA is owned by its members. So they don't have outside investors to answer to.

If USAA didn't think investments were a good fit for them, they could have outsourced to a low fee vendor like TIAA or -wait for it- Vanguard. Instead they sold the unit to Victory Capital. No word on what they plan to do with those funds to my knowledge.

I seem to recall that a USAA press rep said that Victory was a good fit. Here is how Victory describes itself:
About Us

Victory Capital is an investment management firm operating a next-generation, integrated multi-boutique business model with $58.1 billion in assets under management as of March 31, 2019.*

Our differentiated model is comprised of nine autonomous investment franchises, each with an independent culture and investment approach. Additionally, we offer a rules-based solutions platform, featuring our VictoryShares ETF brand as well as custom and multi-asset class strategies.

Our investment franchises and solutions platform are supported by a centralized distribution, marketing and operational environment, in which our investment professionals—unencumbered by other responsibilities—can focus solely on the pursuit of investment excellence.

Victory Capital provides institutions, financial advisors and retirement platforms with a variety of asset classes and investment vehicles, including separately managed accounts, collective trusts, mutual funds, ETFs and UMA/SMA vehicles.
https://www.vcm.com/about-us

That doesn't strike me as a firm with a strong corporate culture based on integrity or really anything in particular. Investors in USAA funds should vote NO on their proxy and consider their alternatives.

User avatar
corn18
Posts: 1392
Joined: Fri May 22, 2015 6:24 am

Re: USAA getting out of mutual fund biz

Post by corn18 » Wed Apr 10, 2019 3:00 pm

I just voted no on the proxy, but I also voted no by leaving USAA banking and investment. I moved all my money to FIDO. Not sure why I didn't do this a long time ago. Now USAA is my insurance company only.
Don't do something, just stand there!

NYnative
Posts: 418
Joined: Thu Mar 01, 2007 10:41 am

Re: USAA getting out of mutual fund biz

Post by NYnative » Wed Apr 10, 2019 8:03 pm

As a USAA member for over 50 years, my belief is that insurance is why they were founded. Mutual funds and other investment services are not part of their mission to provide insurance to service members. I've never conducted any business with them outside of insurance (life, car, home, etc.) and see no reason to. There is a long list of services they provide on the USAA website, however, there are cheaper and more effective ways to obtain those services outside of USAA. They are a great insurance company, especially if you need life insurance without a war clause (which most service members need in addition to SGLI). I guess they diversified far more recently than in the past as they are running out of service members to insure. I remember the ads they had saying 5 out of 10 officers insure with USAA, then it was 7 out of 10 and then 9 out of 10. They have increased their field of membership several times over the last 50 years, but competition on some of their products is intense. In the past, you couldn't beat their auto insurance. I stay with them for the excellent service. I know I can get cheaper car insurance, but I'm not sure it's worth it to save 5 to 10%

YMMV

User avatar
Nords
Posts: 217
Joined: Sun May 20, 2007 9:55 pm
Location: Oahu
Contact:

Re: USAA getting out of mutual fund biz

Post by Nords » Wed Apr 10, 2019 8:30 pm

NYnative wrote:
Wed Apr 10, 2019 8:03 pm
I guess they diversified far more recently than in the past as they are running out of service members to insure.
Here's what I've learned at USAA conferences:
- The military has downsized tremendously each time after WWII and Vietnam and DESERT STORM,
- The Baby Boomer members were dying off faster than Gen X and Millennial officers were signing up, and
- USAA wanted to spread their fixed expenses out over a larger member base.

Opening membership to "All who served honorably, and their families" enlarged the eligible membership pool to about 66M, of which USAA has signed up a little over 12M.

In another happy surprise for membership premiums and fees, the Gen X and Millennial members have exhibited better financial behavior than the Boomers. Fewer defaults, less fraud, more purchases of insurance products, and less cost of membership service.

Admittedly this is USAA's side of the story. There have also been several other major improvements in the insurance industry which have reduced expenses (reserves rules, claims tech, advertising on the Web instead of in print) as well as challenges (more expensive vehicle accidents).
* | * | Please see my profile. I don't read every post, so please PM or e-mail me to get my attention.

resnative
Posts: 3
Joined: Mon Dec 18, 2017 12:46 am

Re: USAA getting out of mutual fund biz

Post by resnative » Sat Apr 13, 2019 9:57 am

I've long thought about moving my retirement assets from USAA to Vanguard. Lower fees, better funds. This finally got me off my duff.

CompareContrast
Posts: 33
Joined: Sun Sep 05, 2010 9:08 pm

Re: USAA getting out of mutual fund biz

Post by CompareContrast » Tue May 28, 2019 3:44 pm

Letter from USAA dated May 20, 2019: "As we prepare for the transition with Victory Capital, the Transfer Funds capability on usaa.com and mobile will no longer be available for mutual fund accounts." So those who link their money market account (MMF) to their checking account are out of luck.

Let's review some interest rates:

Vanguard Prime MMF: 2.41%

USAA MMF: 2.05%
Victory Capital MMF, circa 2021: ???, but who cares? It won't beat Vanguard and it doesn't have any convenience value.

USAA Performance First Savings: $10,000 - $25,000: 0.20%
USAA Performance First Savings: $50,000 - $99,999: 0.86%
USAA Performance First Savings: $1,000,000+ (!!): 1.42%.


USAA is owned by its members. It's not acting like it though. The sale of Victory Capital has resulted in a decline in service offered to USAA's membership. The proxy should have disclosed that their banking customers would be facing effectively lower rates on their savings, due to the end of this fund transfer policy.

To be sure, I can send money to USAA from my Vanguard account, provided I initiate the ACH transfer from Vanguard. My Vanguard account is linked to my USAA savings account though, so this would be a multiple step process. This isn't the end of the world.

I chose USAA bank because of its superior customer service and membership-friendly policies. Anecdotally, while their telephone correspondents are way above average in terms of courtesy and attention, their ability to fix problems isn't what it used to be. I expect to be moving my banking elsewhere within the next couple of years. To be clear, I don't think they are a bad bank. They are just no longer a five star great bank, IMHO.

It's a shame really. They used to put their members first. I remember receiving safety pamphlets from their insurance outlet years ago: I can't recall anything similar recently.

bzargarcia
Posts: 91
Joined: Sat Jul 07, 2007 10:40 am
Location: San Antonio, Texas

Re: USAA getting out of mutual fund biz

Post by bzargarcia » Tue May 28, 2019 9:13 pm

Banking products don't appear to be affected by the Victory transaction. The message from USAA is basically telling individuals to ensure their banking ACH information is set up within the USAA/Victory mutual fund itself. USAA's funds transfer tool (tool for internal USAA account transfers) will no longer work to move money to and from USAA/Victory funds
Bart Garcia

WillRetire
Posts: 167
Joined: Mon Jun 05, 2017 10:01 am

Re: USAA getting out of mutual fund biz

Post by WillRetire » Wed May 29, 2019 8:20 am

CompareContrast wrote:
Tue May 28, 2019 3:44 pm
Letter from USAA dated May 20, 2019: "As we prepare for the transition with Victory Capital, the Transfer Funds capability on usaa.com and mobile will no longer be available for mutual fund accounts." So those who link their money market account (MMF) to their checking account are out of luck.

Let's review some interest rates:

Vanguard Prime MMF: 2.41%

USAA MMF: 2.05%
Victory Capital MMF, circa 2021: ???, but who cares? It won't beat Vanguard and it doesn't have any convenience value.

USAA Performance First Savings: $10,000 - $25,000: 0.20%
USAA Performance First Savings: $50,000 - $99,999: 0.86%
USAA Performance First Savings: $1,000,000+ (!!): 1.42%.


USAA is owned by its members. It's not acting like it though. The sale of Victory Capital has resulted in a decline in service offered to USAA's membership. The proxy should have disclosed that their banking customers would be facing effectively lower rates on their savings, due to the end of this fund transfer policy.

To be sure, I can send money to USAA from my Vanguard account, provided I initiate the ACH transfer from Vanguard. My Vanguard account is linked to my USAA savings account though, so this would be a multiple step process. This isn't the end of the world.

I chose USAA bank because of its superior customer service and membership-friendly policies. Anecdotally, while their telephone correspondents are way above average in terms of courtesy and attention, their ability to fix problems isn't what it used to be. I expect to be moving my banking elsewhere within the next couple of years. To be clear, I don't think they are a bad bank. They are just no longer a five star great bank, IMHO.

It's a shame really. They used to put their members first. I remember receiving safety pamphlets from their insurance outlet years ago: I can't recall anything similar recently.
Hmmm... I did not receive that letter, and I have a Mutual Fund account with USAA. It is already connected to my USAA Checking because dividends/distributions are set to be distributed, i.e. not reinvested. Will watch carefully to make sure this goes smoothly at end of month.

ETA: I cannot find the account settings which specify handling of dividends & distributions. Maybe I am overlooking it, or perhaps it has been removed as part of the transition. Just want to verify the setting hasn't changed. Time for a phone call.

Post Reply