Stop Wasting Wealth in Mutual Funds Don F. Wilkinson

ASSET MANAGEMENT BEYOND MUTUAL FUNDS
Let Don F. Wilkinson introduce you to a better way of investing your money today: a separately managed account.

Seven Ways to Compare Separate Accounts with Mutual Funds:

1. Taxes

It’s no secret that mutual funds can be a tax nightmare. Investors with taxable mutual fund assets have been hammered for a number of years now. Not only did the average fund experience performance losses in recent years, but investors got hit with taxes on capital gains—especially if they purchased a fund late in the year. A separate accounts manager, on the other hand, can do “tax harvesting,” offsetting gains with losses to deliver a higher after-tax return than mutual funds. Read more...

2. Performance

Separately managed accounts have the capability to significantly outperform mutual funds. This is especially true in the volatile market we have experienced since 2000. During this period, the average mutual fund lost value and distributed 9 percent average in capital gains. This brought it home to high net worth investors that mutual funds are less efficient because each fund is forced to carry high reserves anticipating redemptions from other nervous investors. Read more...

3. Customization

By aligning your investment strategy and risk level so you’re in sync with your financial advisor and money manager, you would carefully choose a crafted portfolio (i.e., large cap value, small cap value, etc.). You may choose not to include any security in your portfolio for any number of economic or social reasons. For example, if you work at IBM, you might not want any of your own company stock included in your portfolio because you already have stock options with the company. Try that with a mutual fund. Read more...

4. Transparency

Even though the Web has made the tracking of securities considerably faster and easier, the major funds companies have been painfully slow in keeping investors informed in a timely manner as to what stocks actually comprise their portfolio. Contrast that with separate account holders who can view their positions almost on a daily basis. Read more...

5. Asset Control

It’s a fact that the span of control of a manager in charge of a mutual fund can be limiting with scores of stocks to look after. In a separate account, money managers advise on usually fewer than 50 securities in each client’s portfolio. These money managers usually have access to dozens of security analysts to provide further backup monitoring. Read more...

6. Prestige

Knowing your portfolio is being managed by a private money manager alongside a Ford Foundation or a Bill Gates is a prestige factor a separate account carries that is hard to ignore. Mutual fund managers don’t differentiate between one investor and another. Their job is to get the numbers, regardless of who is investing in the fund. Separate accounts investors receive asset management on an individual basis, receiving custom solutions on the securities they own. Read more...

7. Affordability

The ticket to get into a separate account is down to an average minimum of $100,000 and falling. This allows a new breed of investor—on average, younger and savvier than investors who aged with mutual funds—to demand a better investment experience. These investors expect to make money, expect excellent service, and expect up to date information on what is going on 24/7 in his or her portfolio. Read more...