ACAP Fund - thoughts?

[msrhoda]

Hello,

Any thoughts on investing in the ACAP fund managed by Alkeon Capital? It is a long short global growth fund. My FA is recommending this. I am inexperiened so need "layman's terms" please.

Much appreciated!

 

[REWahoo]

That's a closed-end fund with a 3% front end load, a 0.75% 12B-1 fee, and a 1.5% management fee? No thanks.

 

[VanWinkle]

You start out 3% behind the Index and then give up 2% per year in expenses(2.25% - .25%) for the comparable index. It really sounds like an exciting fund, although I know nothing about it.

 

[Another Reader]

You need to fire this adviser, pronto. The fees are a rip off. No doubt the fees on the other funds he sells you are a rip off as well. Start analyzing his behavior by asking yourself these questions.

1. How long has this adviser been managing your money? How has he performed relative to a simple low-cost three fund portfolio or a conservative managed fund such as Vanguard's Wellington or Wellesley?
2. Do you understand what this investment is and if/when it might be appropriate in someone's portfolio? Is there a lot of hand waving rather than explanation?
3. What is his reason for including this in your portfolio? Will it benefit you or him more?

What he is likely selling you is a story about how he can do better than the market by using these expensive "tools." Make him show his results over say 10 or 20 years. Fund names, their fees, and his fees netted out included. It's highly unlikely he performed as well as a simple index fund approach with a reasonable asset allocation has over time.

In your shoes, I would fire him and move on.

 

[MRG]

No offense intended but......

Your FA is exploiting your ignorance. Please read a little, perhaps from the forum's recommended list. Bogle comes to mind.

 

[DrRoy]

That's a closed-end fund with a 3% front end load, a 0.75% 12B-1 fee, and a 1.5% management fee? No thanks.

Agree 100%.

You start out 3% behind the Index and then give up 2% per year in expenses(2.25% - .25%) for the comparable index.

Ditto.

You need to fire this adviser, pronto. The fees are a rip off. No doubt the fees on the other funds he sells you are a rip off as well.
In your shoes, I would fire him and move on.

If you do not feel comfortable investing on your own, at least go with a robo-advisor or a flat fee only advisor that is not sapping your wealth so heavily month after month and year after year.

No offense intended but......

Your FA is exploiting your ignorance. Please read a little, perhaps from the forum's recommended list. Bogle comes to mind.

Another +1. Do you see a trend here?

 

[pb4uski]

That's a closed-end fund with a 3% front end load, a 0.75% 12B-1 fee, and a 1.5% management fee? No thanks.

Those are totally ridiculous in this day and age. There are so many great no-load funds available I dont see why anyone in their right mind would pay a load. Also, 2.25% ER is outrageous.

My advice OP is that you RUN... and fire your FA... all s/he is doing is lining their pocket at your expense.

 

[MRG]

Those are totally ridiculous in this day and age. There are so many great no-load funds available I dont see why anyone in their right mind would pay a load. Also, 2.25% ER is outrageous.

My advice OP is that you RUN... and fire your FA... all s/he is doing is lining their pocket at your expense.

+1

A quick search for "ICI and mutual fund expenses" shows how outrageous this is.

http://www.icifactbook.org/ch5/17_fb_ch5

"On an asset-weighted basis, average expense ratios* incurred by mutual fund investors have fallen substantially (Figure*5.1). In 2000, equity mutual fund investors incurred expense ratios of 0.99*percent, on average, or 99 cents for every $100 invested. By 2016, that average had fallen to 0.63*percent, a decline of 36*percent. Hybrid and bond mutual fund expense ratios also have declined. The average hybrid mutual fund expense ratio fell from 0.89*percent in 2000 to 0.74*percent in 2016, a reduction of 17*percent. In addition, the average bond mutual fund expense ratio fell from 0.76*percent in 2000 to 0.51*percent in 2016, a decline of 33*percent."

 

[OldShooter]

Leave. Now.

The easiest way is to open an account where the company and the rep are fiducaries. Schwab and Fidelity are the big gorillas but there are many alternatives. Each will offer various options and fees depending on your portfolio size and need for help. The key word is: fiduciary.

At the new place, you simply fill out a form to have 100% of your assets transferred from the crook you're now using. You never have to talk to him/her again. The form gets it done.

The only hitch may be if the guy/gal is a real crook there may be assets (like maybe annuities) that cannot be transferred because they are proprietary to the brokerage house. Your new broker may be able to help with this. Or possibly an attorney.

 

[DrRoy]

I only now saw that you sent a message a couple weeks ago. A fee that is a % of assets is not a flat fee. A flat fee is a fixed dollar amount that is only charged when the FA does something for you, like create an investment plan or perform a review.