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.

Comparing Separate Accounts with Mutual Funds:

Separate Account Customization

Mutual Funds: Herd Mentality
Separately Managed Account: Investor Packs His Own Chute

The only money in a separately managed account is your own.

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. It would be impossible to avoid ownership in any firm due to individual investor intentions.

Customization of your portfolio goes much farther. You have the right to impose your values on your portfolio. If you say no to tobacco stocks, your money manager can eliminate tobacco companies in your basket of securities. Needless to say, you could not specify elimination or inclusion of a particular stock group with a mutual fund.

In short, you have the right, with a separately managed account, to include or exclude securities based on your ethical, economic, or political views. This is usually not possible with a mutual fund.


Excerpt from Stop Wasting Your Wealth in Mutual Funds: Separately Managed Accounts—The Smart Alternative

Stop Wasting Wealth
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Chapter 8—Customization: Off the Rack or Tailor-made?

Mutual Funds:

  • Investor does not own stocks.
  • Investment is pooled with other investors.
  • Investor has no say in fund’s holdings.

Separate Accounts:

  • Investor owns stocks.
  • Investor can buy and sell securities in portfolio.
  • Investor has the option to include or exclude stocks in portfoli