Quote:
Originally Posted by CFP James
I hope to answer your concerns with a few comments.
STU from NYC: Your comment does describe a SMA. It is a diversified portfolio of stocks that spread the risk. Just like a mutual fund.
manaboutown: SMA's have Chartered Financial Analysts managing the portfolio. This can not be compared to a local stock broker (with no CFA designation).
Here is a short personal explanation of why I am more comfortable with an SMA.
My manager is a CFA (Charted Financial Analyst) with 39 years experience of managing both mutual funds and SMA's.
My portfolio of 53 individual stocks that all pay dividends are actually owned by me and listed with the shares I own in each stock on the Charles Schwab Website.
My manager has full discretions over buying and selling. I rely on the manager's expertise just like a mutual fund manager.
However unlike a mutual fund my manager will never "over diversify" my stock portfolio or take gains or losses that are forced due to cash flows of the mutual fund. Let me explain that I have spoken over lunch with successful mutual fund managers that admit they are buying 25 or more stocks they DO NOT WANT TO OWN. Why?
Because they are attracting so much new money into the mutual fund and they have to invest the new money. Regulations state they can own over a certain % of any one stock. (they can not buy more of their best stocks)
A SMA manager can attract new money but it is never comingled with my shares and the manager never has too over diversify my account.
My closing thought is I have had several mutual fund managers with billions under management admit to the group at lunch they dream of only managing SMA accounts.
Can I get invited to lunch with some of you guys?
Merry Christmas
|
These are all good points derived from your professional experience. Thank you for providing them as I did not know any of this.
Getting together for a lunch would be enjoyable, so sure!
Merry Christmas to you, James!