SMA's (separately managed account)

[Packman]

I am considering setting up a SMA for bonds with funds within my IRA. I use Fidelity for my brokerage accounts. The fee is 35 to 40 basis points, depending on the amount invested, which is less than most actively managed mutual funds to my knowledge. I've always felt that active management for bonds was better than an index fund. I am not interested in trying to buy individual bonds myself nor taking the time to do the research to become knowledgeable enough for a half million dollar investment. Does anyone have any advice? Maybe things to ask or to watch out for? I have a meeting set up in about a week to discuss with Fidelity and I'm organizing my questions now. Thanks.

 

[OldShooter]

IMO the big question is how to achieve adequate diversification with such a small amount of money, assuming the SMA will buy something besides govvies. And if just buying govvies, that's something you can safely do at home.

DW and I both think bond funds are a bad idea. We have low 7 figures in our FI tranche and it is about 95% in TIPS. No interest in corporates (or junk or non-US).

 

[rk911]

I am considering setting up a SMA for bonds with funds within my IRA. I use Fidelity for my brokerage accounts. The fee is 35 to 40 basis points, depending on the amount invested, which is less than most actively managed mutual funds to my knowledge. I've always felt that active management for bonds was better than an index fund. I am not interested in trying to buy individual bonds myself nor taking the time to do the research to become knowledgeable enough for a half million dollar investment. Does anyone have any advice? Maybe things to ask or to watch out for? I have a meeting set up in about a week to discuss with Fidelity and I'm organizing my questions now. Thanks.

Our investments are actively managed and separated into pre- and post-tax. Within one of the post-tax accounts we have added a muni-bond ladder (1-5 year maturity) to the mix of mutual funds. We made it clear that we set the tone, the direction for our accounts, no 'exotic' investments of any sort...bond and equity mutual funds, CD's, cash and now muni bonds. Other from standing instructions he is not authorized to make new investments without our approval. He is available to us just about anytime.

 

[capjak]

I have a SMA Corporate Bond Fund from Fidelity. It has 65 different bonds, treasury, MBS and Corporate.

You meet with them once a year at least I believe and they go through the performance and verify it still meets your needs, you can stop at anytime and you will own the individual bonds.

It performance has been slightly better than a bond fund, which is of course has been bad as all bonds that last few years have lost considerable value.

 

[teej1985]

I am considering setting up a SMA for bonds with funds within my IRA. I use Fidelity for my brokerage accounts. The fee is 35 to 40 basis points, depending on the amount invested, which is less than most actively managed mutual funds to my knowledge. I've always felt that active management for bonds was better than an index fund. I am not interested in trying to buy individual bonds myself nor taking the time to do the research to become knowledgeable enough for a half million dollar investment. Does anyone have any advice? Maybe things to ask or to watch out for? I have a meeting set up in about a week to discuss with Fidelity and I'm organizing my questions now. Thanks.

I have to think every single actively managed bond fund from Vanguard is less than 40 bps. Also take a look at the bond funds from Baird, I believe all their bond funds are under 40 bps as well:

https://www.bairdassetmanagement.com/baird-funds/bond-funds/