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Please Review this Portfolio Proposal
Old 05-27-2013, 02:08 PM   #1
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Please Review this Portfolio Proposal

I apologize if you've seen this message on other forums, but I'm seeking feedback from various sources.

I recently received a proposal from a financial adviser. Putting aside that he didn't map out how we'd get from where we are to where he proposed we go, could you please assess his recommendations based on:

a) placement of each investment for tax efficiency
b) the quality of the funds he's proposing
c) overall asset allocation for folks 5-10 years from retiring

Non-Retirement Accounts
2% Artisan Small Cap Fund Investor Shares
3% Baron Partners Fund Retail Shares
2% Baron Small Cap Fund
2% Calvert Short Duration Income Fund Class Y
2% Hartford Capital Appreciation Fund Class I
3% Hartford Dividend and Growth Fund Class I
1% Hartford Small Company Fund Class A
3% Loomis Sayles Strategic Income Fund Class A
4% Nuveen High Yield Municipal Bond Fund Class I
3% Pioneer Mid-Cap Value Fund Class Y
2% Royce Dividend Value Fund Service Class
1% Royce Global Dividend Value Fund Service Class
4% Royce Opportunity Fund Investment Class
3% Third Avenue Focused Credit Fund Institutional Class
3% Third Avenue Real Estate Value Fund Institutional Class
1% Wasatch Long/Short Fund Investor Class
2% Wasatch World Innovators
39% TOTAL Non-Retirement Accounts

Retirement Accounts
1% ALPS | Red Rocks Listed Private Equity Fund Class I
1% Artisan Mid Cap Fund Investor Class
2% Artisan Mid Cap Value Fund Investor Shares
1% Baron Partners Fund Retail Shares
1% Baron Real Estate Fund Retail Class
3% BlackRock Equity Dividend Fund Investor A Shares
1% Bridgeway Small Cap Growth Fund
2% Bridgeway Small Cap Value Fund
3% Delaware Small Cap Value Fund Class A
2% Dodge & Cox International Stock Fund
1% Dodge & Cox Stock Fund
0% Fidelity Contrafund Fund
4% Goldman Sachs Growth Opportunities
3% Hartford Growth Opportunities Fund Class I
1% Hennessy Gas Utility Index Fund Investor Class
2% ING Corporate Leaders Trust Series B
1% ING Senior Income Fund Class A
3% Invesco Charter Fund Class A
3% Invesco Convertible Securities Fund Class Y
3% Ivy Small Cap Growth Fund Class A
2% Matthews Asia Dividend Fund Investor Class
4% Prudential Jennison Utility Fund Class A
2% Putnam Voyager Fund Class Y
1% T. Rowe Price Health Sciences Fund
2% The Hartford Healthcare Fund Institutional Class
3% Third Avenue Focused Credit Fund Institutional Class
1% Vanguard Developed Markets Index Fund Investor Shares
2% Wasatch Emerging Markets Small Cap
2% Wasatch International Growth Fund
1% Wells Fargo Advantage Discovery Fund Class A
61% TOTAL Retirement Accounts
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Old 05-27-2013, 02:15 PM   #2
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Seams like a lot to keep track of to me.
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Old 05-27-2013, 02:23 PM   #3
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I Also think these are too much Stocks too keep track, I should consider 1/3 of it
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Old 05-27-2013, 02:27 PM   #4
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All these less than 5% accounts sound silly to me, but then I favor a simple portfolio like total Stock Market, Total Bond and maybe a Small Cap fund.

Lazy Portfolios - Bogleheads
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Old 05-27-2013, 02:31 PM   #5
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Far too many funds, all with such small allocations, making the portfolio unnecessarily complex. If you're advisor recommended all those funds, he/she is wasting your time IMO. There is nothing at all wrong with the 3/4/5 fund lazy portfolios, and more than 10-12 max is overkill. Lazy Portfolios - Bogleheads

Some are more esoteric than they're worth IMO - Asia Dividend !!!

You really don't need more than one fund for any asset class, maybe two. Worthwhile funds will have plenty of diversification within their asset class.

And I'd hesitate to buy any fund that I wasn't confident enough in to invest at least 5% except maybe the most volatile sectors/classes - most people don't own/need such funds.

If you didn't have so many I'd look up tax efficiency on M*and comment but there are just too many. So I'd encourage you to look them up on M * and that will answer the placement questions for you. Best of luck...
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Old 05-27-2013, 02:44 PM   #6
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You mentioned that you have posted this portfolio proposal on other forums. Could you please list those other forums? And, was their take on this proposed portfolio much different than the first few responses that you have received here?
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Old 05-27-2013, 03:00 PM   #7
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way too many funds if you ask me.
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Old 05-27-2013, 03:13 PM   #8
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You might be a bit underweight on the Fidelity Contrafund.
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Old 05-27-2013, 03:19 PM   #9
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way too many funds if you ask me.
+1

Its almost like the FA is treating mutual funds as individual stocks when you have that many. The fund expenses and content overlap may not be that efficient.
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Old 05-27-2013, 03:27 PM   #10
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I just see one big hassle with zero benefit to holding this many funds. Worse than that, I'd bet the performance is less than a simple diversified index portfolio.
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Old 05-27-2013, 03:40 PM   #11
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They mostly seem to have pretty hefty expense ratios. I would also want to ask him to show me the M* x-ray views, since I'm guessing there is some serious duplication in that bunch.
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Old 05-27-2013, 03:56 PM   #12
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Did you ask him why so many funds? What's your investment objectives?
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Old 05-27-2013, 04:14 PM   #13
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Do you know your target AA with these funds? Did your FA tell you? Just curious.
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Old 05-27-2013, 04:52 PM   #14
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WOW that is a lot to have to track! Is the firm actively managing these and re balancing regularly or is their diversification strategy their hedge? Unless each fund is the best of breed there has to be a simpler approach.
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Old 05-27-2013, 04:53 PM   #15
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That looks like a big 'ol mess to me. Do you know what the asset allocation is for each account and/or as a whole? You should be able to hit every important asset class with about 14 low cost mutual funds. There's no good reason to have multiple funds in the same class... for example I think I saw at least 7 small cap funds in there and there's likely quite a bit of overlap with funds that cover multiple market caps. Simplification is good; complexity makes it hard for you to keep track of your asset allocation and what your advisor is doing.
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Old 05-27-2013, 05:49 PM   #16
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Silly nonsense for the reasons everyone said, if these were individual stocks than having a 1 or 2% allocation would fine but for mutual funds. In a word don't hire the guy.

Ok a couple of specific example. It is a pain in the butt to claim foreign tax credit in IRA. So generally speaking you want to have international fund in a taxable account, as opposed to having in a tax deferred. Yet he has international funds somewhat randomly distributed in both taxable and tax deferred. Now the amount of money is small perhaps a basis point or 3. But still if you are starting from scratch might as well do it right.

The long/short fund is another example. Leaving aside the idiocy of why a one percent allocation to a long/short fund will make a difference, this is clearly the type of fund that belongs in a IRA. Short positions are always treated as short term loses or gains.
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Old 05-27-2013, 08:21 PM   #17
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The proposed portfolio is just plain stupid. It really shows the incompentency of the FA.

Or maybe is it really good for them since they would probably charge you per transaction and when you left, you would have to pay a per fund fee as well.

I don't know why lots of responders are being polite about this portfolio. It plainly sucks and is something only an idiot would come up with. A real idiot.
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Old 05-27-2013, 09:27 PM   #18
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I think that exceeds even my slice and dice. I do like a lot of the fund companies, though there are many I don't use as well. Although your AA is probably to keep these percentages where they are, you should have a higher level AA that describes what the heck each of them is doing in your portfolio. That should also allow you to compare each of them with an appropriate ETF or index fund.
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Old 05-27-2013, 10:12 PM   #19
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Dumbest thing I have ever seen. Fire that "advisor".
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Old 05-27-2013, 10:14 PM   #20
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Quote:
Originally Posted by RockyMtn View Post
way too many funds if you ask me.
+1 ridiculous number of funds
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