[manaboutown]

Originally Posted by Boomer

Thanks, manaboutown and Caymus,

I have the top ten holdings of funds in my friend's advisor's report, but I want to take a scalpel to those to dissect them for as much as I can find out about the fees. An earlier search gave me only partial information for some and others I could not find at all. I probably didn't try hard enough.

I have done this throughout the years -- for my own info as manager of the Boomer Fund -- by using those sources you mentioned, but I will take another look. (I used to sometimes copy Will Danoff's homework by looking at Contrafund's top ten holdings.)

I must sound like a woman obsessed. I have to find out what's inside those mutual funds in fees. The AUM is the easy part. But are the internal fees fair fees? I also wonder if incentives come in other forms, not exactly commissions.

Maybe I should take up crafts or day-drinkin' instead of delving into mutual fund costs............yeah, right, like that's gonna happen.

Boomer

Boomer, you are a friend indeed to a friend in need and have a lot of digging ahead of you to discover deeply buried and obscured costs followed by analysis thereof to get to the bottom of how much her current "financial advisor" is actually costing her.

As I understand it her portfolio is at one firm, she uses a single "financial advisor" (stock bookie to me) to whom she pays an AUM, and her portfolio contains several, possibly numerous, actively managed mutual funds. It may also contain some index funds.

A second brief search came up with a government website which in simple laymen's terms lists and describes fees which mutual funds charge. According to the website a fund's prospectus reveals the fees it charges. That means to me one would have to obtain a prospectus of each mutual fund in her portfolio and investigate its fees and other expenses.

"Mutual Fund Fees and Expenses
As with any business, running a mutual fund involves costs. For example, there are costs incurred in connection with particular investor transactions, such as investor purchases, exchanges, and redemptions. There are also regular fund operating costs that are not necessarily associated with any particular investor transaction, such as investment advisory fees, marketing and distribution expenses, brokerage fees, and custodial, transfer agency, legal, and accountants’ fees.

Some funds cover the costs associated with an individual investor’s transactions and account by imposing fees and charges directly on the investor at the time of the transactions (or periodically with respect to account fees). These fees and charges are identified in the fee table, located near the front of a fund’s prospectus, under the heading "Shareholder Fees."

Funds typically pay their regular and recurring, fund-wide operating expenses out of fund assets, rather than by imposing separate fees and charges directly on investors. (Keep in mind, however, that because these expenses are paid out of fund assets, investors are paying them indirectly.) These expenses are identified in the fee table in the fund’s prospectus under the heading "Annual Fund Operating Expenses."

In the fee table, under the heading of "Shareholder Fees," you will find:

Sales Loads (including Sales Charge (Load) on Purchases and Deferred Sales Charge (Load))

Redemption Fee

Exchange Fee

Account Fee

Purchase Fee

In the fee table, under the heading of "Annual Fund Operating Expenses," you will find:

Management Fees

Distribution [and/or Service] (12b-1) Fees

Other Expenses

Total Annual Fund Operating Expenses"

From: https://www.investor.gov/introductio...on%20investors.

It may be possible that her broker can charge her commissions/fees on her trades and other matters as well as getting paid the AUM. That thought makes me cringe. One would need to read her engagement contract to find out.

"Not all fees come packaged under the same umbrella. You may see the following under your brokerage contract or regular statements:

Annual fees
Research fees (for investment data)
Inactivity fees (if you aren't trading regularly)
Fund fees
Account fees
Assets under management (AUM) fees"

From: How Brokerage Fees Work

[Caymus]

Originally Posted by Boomer

Thanks, manaboutown and Caymus,

I have the top ten holdings of funds in my friend's advisor's report, but I want to take a scalpel to those to dissect them for as much as I can find out about the fees. An earlier search gave me only partial information for some and others I could not find at all. I probably didn't try hard enough.

I have done this throughout the years -- for my own info as manager of the Boomer Fund -- by using those sources you mentioned, but I will take another look. (I used to sometimes copy Will Danoff's homework by looking at Contrafund's top ten holdings.)

I must sound like a woman obsessed. I have to find out what's inside those mutual funds in fees. The AUM is the easy part. But are the internal fees fair fees? I also wonder if incentives come in other forms, not exactly commissions.

Maybe I should take up crafts or day-drinkin' instead of delving into mutual fund costs............yeah, right, like that's gonna happen.

Boomer

You should name a few of the funds.

[spinner1001]

Originally Posted by Boomer

I opened this thread a week ago because a friend asked me to look at a report from her advisor. She is with an advisor who gets a percentage of Assets Under Management. That number is perfectly clear. But when I looked at the report, I became curious as to what kinds of fees were enshrined inside all those mutual funds, which led me to wonder what is the real cost to her of doing business.

Thank you to those who have participated in this thread by offering good information. I was going to start another thread this morning with a specific question that I know somebody here will be able to answer, but I decided to just add the question here.......

The report I am looking at lists the top ten holdings, along with a lot of other funds. I would like to have a clear picture of what those holdings entail -- at least the top ten -- for a start. I was able to find part of the info on Fidelity -- even though these are not Fidelity funds.

I then went to investor.gov which sent me to FINRA. After skimming through page after page of instructions on the FINRA site, I began to feel like my head was being pinched in a vise and I concluded this site must be designed for those who have a bunch of those money-handler designations after their names. Anyway, mere bumpkin that I am, I soon lost interest in continuing my quest for more info on these funds by using FINRA.

Sooooo, to make my long story longer, I am finally getting to my question of the day:

I am going to look at subscribing to Morningstar. I saw that they have a free 7-day opportunity. I do not want to spring for a whole year, but I think I saw there might be a monthly option that could give me time to get all my deciphering of these funds done if 7 days is not enough.

Is Morningstar easier to use than the FINRA fund analyzer?

Boomer

(This quandary of mine is exactly why I stick to individual div stocks, cash and a few index funds that do not seem to cost much. But here I am trying to figure out if my friend is being treated fairly. Is she paying a helluva lot more than she thinks she is with just that AUM percentage? Front loads? Back Loads? Trailer Fees? Expense Ratios? Turnover Rates? And probably a few other things buried in those funds? AAAAAAAUGH!!!!!)

The regulator requires each US mutual fund to list its fees in the fund’s prospectus document that is published, I recall, quarterly. If all you want is the learn about fees, it is in there usually in a common format. The prospectus document is available from the company sponsoring the fund such as Vanguard and, I believe, the US SEC’s EDGAR database. Reading multiple prospectuses is the most accurate and complete to learn about fees but reading them takes time. A commercial product such as one from Morningstar will provide summary information saving you time.

Also, the regulator requires each fund to disclose their investment holdings I believe quarterly.The filing is available on the US SEC’’s EDGAR database, The filing will likely show all holdings of a fund, not only the top 10 or whatever.

I can’t compare the Morningstar and FINRA products.

[manaboutown]

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