Over my head

[Badger]

My step daughter is employed by the public school system and told me a couple of days ago she has been having money invested from her paycheck. I don't know if it is a 403b but would assume so.

What she has been told to invest in is First Trust - Capital Strength,51. Ticker is FJRXUX:NASDAQ. I don't know anything about it but it seems to be a MF invested in Large Cap Growth with some pretty good companies as far as I understand.
What I don't know is what she is being charged for this investment. Does it have any kind of load? What is the annual fee? etc. Does anyone know?

Can anyone shed a light on this fund? Since it is through her school system it probably can't be moved to another fund in Vanguard or Fidelity but is it comparable to a MF in either of these companies?
Any words of wisdom?


Cheers!

[Spock]

Bloomberg says:
Inception Date 04/01/2020
so there is 0 info on it yet on the freebee sites.

[MichaelB]

Here’s a link to the web page with fund information https://www.ftportfolios.com/Retail/...x?fundid=14935

[OldShooter]

New fund?!??! Stay away from whomever gave her that advice. Ditch it and find a well-established fund with a well-known manager. Get their list of investment options for review. IIRC they are required to offer at least one low cost total market fund as a matter of fiduciary duty.

As far as costs go, for 401Ks there is a disclosure form 404a-5 that provides the data. Presumably there is a similar form for her retirement plan. SHe must insist on getting this for your review.

Annual fee is the biggie. Without looking very hard I have seen them as high as 1.5%, which by itself completely poisons the well -- never mind fund expense ratios.

[braumeister]

Quote:

Originally Posted by MichaelB Here’s a link to the web page with fund information https://www.ftportfolios.com/Retail/...x?fundid=14935

Wow. It's not a MF, it's a UIT. Very different animal.

According to that page, it has a hefty bunch of fees as well.

[bolt]

I'd explore MichaelBs words of advice, it seems it has a 2.75% Max ER?
Is that inside a 1% AUM product?
Thats typical in .gov sponsered 403b/457 etc.

CCP/ Standard Account Sales Charges *
Transactional sales charges: Initial: 0.38%
Deferred: 1.94%
C&D Fee: 0.43%
Maximum Sales Charge: 2.75%
CUSIP Type Distribution
30313Q309 Cash Semi-Annual
30313Q317 Reinvest Semi-Annual
* Based on the offer price as of 05/07/2020 4:00pm ET

Fee/Wrap Account Sales Charges *
C&D Fee: 0.44%
Maximum Sales Charge: 0.44%
CUSIP Type Distribution
30313Q325 Cash-Fee Semi-Annual
30313Q333 Reinvest-Fee Semi-Annual
* Based on the NAV price as of 05/07/2020 4:00pm ET
In addition to the sales charges listed, UITs are subject to annual operating expenses and organization costs.

Deferred Sales Charge Schedule
Amount Date
$0.07500 July 20, 2020
$0.07500 August 20, 2020
$0.07500 September 18, 2020

Good luck & best wishes!

[pb4uski]

And here is the fact sheet: https://www.ftportfolios.com/Common/...9-8c192b64909e

It has a 2.25% front end load taken out in 3 equal installments in July, August and September. I don't see any reason to pay a front-end load in this day and age.

What other choices does she have? It sounds like the rep is peddling the fund de jour.

[swakyaby]

Regarding fees, I saw a prospectus and a fact sheet on the site ftportfolios.com. What I saw on the fact sheet was a deferred sales charge of 2.75% on standard accounts, payable in 3 monthly installments beginning 7/2020. For wrap accounts, there appears to be a maximum annual fee of 0.5%. Don’t know if this applies in your stepdaughter’s case.

Whoops, it appears pb4uski got the details first.

[jazz4cash]

My daughter came over and announced that she had signed up for the 403b offered by her school system. A very kind gentleman helped her since he was making regular visits to the teacher's lounge and meeting with his other clients. I asked what investments he chose for her and she said it was "a portfolio" and waved her arm in a semi-circle.

I looked over the paperwork and it was an annuity at Axxa. Good choices, but still an annuity with high loads. We went directly to the school system benefits web site and learned that she could choose other providers (but most were not visiting the teacher's lounge)! We set her up with a 403b at Fidelity for future payments but left the Axxa account in place (due to surrender charge).

[Winemaker]

Back in the '90's, the only choices for DW's 403b was a tax deferred annuity, but the school district paid the load.

[swakyaby]

Quote:

Originally Posted by jazz4cash We set her up with a 403b at Fidelity for future payments but left the Axxa account in place (due to surrender charge).

I had heard somewhere that one could cancel an annuity contract within 72 hours of signing the agreement, without surrender penalty. It was meant to allow one to read the fine print and realize the high fees. I could be mistaken, however.

[jazz4cash]

Quote:

Originally Posted by swakyaby I had heard somewhere that one could cancel an annuity contract within 72 hours of signing the agreement, without surrender penalty. It was meant to allow one to read the fine print and realize the high fees. I could be mistaken, however.

That sounds familiar and also don’t they have a “free look” cancellation period? I don’t recall details inDDs case, but it was a tiny amount so she just left it.

[pb4uski]

Last I knew, life insurance and annuities have a 10-day "free look"... can be cancelled within 10 days of issuance for a full refund or premium.

[HI Bill]

Wow, the financial industry is still preying on the teachers! My mom and dad (both elementary teachers), in the late 1970s or early 1980s, had a salesperson from Oppenheimer stop by and help them set up their investments. All were front-load MFs. Very high annual fees. At the time, they had little other choices, but today, we all do! I learned, circa 1993, about VG. Since then, I've moved all of the assets I could to VG for their lower fees. I still have some with ML, but even those funds are invested in a VG MF, similar to VOO.

[Chuckanut]

The 403b accounts offered to me were terrible. Big loads and poor performance. Thankfully the state allowed teachers to invest in a deferred salary plan that had low cost index funds.

Alas my rich and powerful teacher’s union didn’t seem to care that most 403b choices were high cost garbage. I wonder why? :sarcasm:

[SpinDr]

The WSJ did a story awhile back about the extremely deceptive tactics used by “advisors” to direct 403b monies for teachers. My wife and I saw this first hand. Without going into detail, the advisor, when asked about low cost index options pulled out a bunch of funds I was not familiar with, all with high fees. It took me pressing him hard for him to then say, “we also have these Vanguard funds which can be purchased through Voya”. If I was not involved, and pushing hard, no word would be mentioned about the more appropriate options. I am guessing there is big story to be told about how teachers are fleeced by the FA community.

[jazz4cash]

Quote:

Originally Posted by HNL Bill Wow, the financial industry is still preying on the teachers! My mom and dad (both elementary teachers), in the late 1970s or early 1980s, had a salesperson from Oppenheimer stop by and help them set up their investments. All were front-load MFs. Very high annual fees. At the time, they had little other choices, but today, we all do! I learned, circa 1993, about VG. Since then, I've moved all of the assets I could to VG for their lower fees. I still have some with ML, but even those funds are invested in a VG MF, similar to VOO.

The worst part to me is I suspect the teacher’s unions do a terrible job helping their constituents navigate the sea of sharks. No proof of this suspicion, just an observation.

[yakers]

Check out 403bwise.com, for a lot of good information for teachers