Mom's 'managed portfolio' at Edward Jones
With Dad's death last year, Mom was faced with selling the house, renting a condo, and investing the proceeds from the sale to provide an income stream. I toyed with the idea of managing Mom's assets myself (I went so far as to offer), but she followed the time-honored tradition of asking her friends who they invested with and went that way.
Since Mom still labors under the delusion that 'I'm the smart one', I was asked to review the portfolio and give her my blessing. Here's what they came up with:
|
Diversified Portfolio
at Edward Jones |
|||
|
50% |
Domestic
Stock Funds |
|
|
|
20% |
International
Stock Funds |
|
|
|
30% |
Municipal
Fixed Income Bonds |
|
|
|
% |
Category |
Fund Name (ticker) |
Notes |
|
15.00% |
|
|
1.88%
Expense Ratio |
|
15.00% |
|
|
1.88%
Expense Ratio |
|
10.00% |
|
Anchor
Capital Advisors ( |
1.88% Expense
Ratio |
|
10.00% |
|
Gannett
Welsh & Kotler, Inc ( |
1.88%
Expense Ratio |
|
20.00% |
International
Equity |
Jarislowsky Fraser Limited ( |
1.88%
Expense Ratio |
|
30.00% |
Muni Fixed Income Bonds |
Lord Abbett & Co. ( |
1.88%
Expense Ratio |
|
100% |
|
|
|
If it's not obvious, the portfolio is structured around a 'one price for everything' management fee of 1.88%. If you've been reading around my site, you'll know I'm pretty loathe to pay sales loads, high expense ratios, and the like.
This presented something of a dilemma. If these guys are going to 'manage' the funds, they should of course be fairly compensated. When I had what I considered a properly diversified portfolio in relatively efficient mutual funds, I had a total weighted expense ratio of 0.98%, or roughly half the expense. Weighing this against my potential actual time managing Mom's account, and the awkwardness of it (imagine the 'fun' of explaining that Mom's portfolio is down 10% YTD at the Thanksgiving dinner table), I decided that the difference in expenses may well be worth it. Plus, Mom likes it. They provide a 'one stop shop' feel for her, pay her rent, stuff like that.
I was also nicely impressed at the asset allocation scheme. The stereotype for a senior portfolio leans towards '100% Muni bonds', and this portfolio is well-positioned to outpace inflation and actually grow.
Send e-mail to: Todd <todd@thepeaches.com>