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Old 03-17-2006, 11:59 AM   #21
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Now she is telling me that Morningstar is using the wrong index. She's using an average of three different indices, so basically creating her own measuring tool!
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Re: Help with Annuity
Old 03-17-2006, 12:02 PM   #22
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Re: Help with Annuity

Brewer,

Does M&E mean Management and Expense? I thought that was included in the expense ratio. Could there be other fees as well?
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Re: Help with Annuity
Old 03-17-2006, 12:17 PM   #23
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Re: Help with Annuity

Quote:
Originally Posted by smooch
Brewer,

* *Does M&E mean Management and Expense? I thought that was included in the expense ratio. Could there be other fees as well?*
M&E means "Mortality & Expense" fees. In most variable annuities, there are several layers of fees:

- Contract charges levied to pay for policy administration
- mortality and expense fees, to pay for the true mortality insurance coverage and insurance-related expenses
- The expense ratio of the underlying fund
- any guarantee fees for minimum withdrawal, minimum death benefit, and other corny guarantees

For a VA with minimum withdrawal, etc. guarantees, it is typical to see expense ratios in the 3 to 3.75% range!

Smooch, the hooker agent is playing games with you. Making up a benchmark, not having an open discussion of expenses, and frankly, selling you a wholly unsuitable product in the first place.
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Re: Help with Annuity
Old 03-17-2006, 12:18 PM   #24
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Re: Help with Annuity

Quote:
Originally Posted by Brat
I think what he is looking at is the Alpha against Standard Index, and then there is the Beta against Standard Index.* Since the group was talking about Wellesley recently its Alpha is -1.10, the category -2.13.* My favorite, OAKBX was 0.87, and -2.05 respectively.

So, what is the Alpha actually measuring?
Alpha is measuring excess return versus an index. It doesn't work very well when you specify the wrong benchmark, like when you compare an equity index to a fund with a blob of bonds in it. This is one of the (many) reasons I am not enthralled with m*.
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