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Message
Long Term Family Trust Investment
Posted on 1/21/17 at 9:11 am
Posted on 1/21/17 at 9:11 am
Hey guys, I don't post much to this board, but I had a question that I would love some feedback on.
My dad has a trust that he had set up to help manage some of his business interests. About 5 years ago he put about $950k in an investment account with a regional bank. We have been very dissatisfied with the returns, as the total portfolio is valued at $1,070,000 as of today. Me and my brothers feel like we should be doing better, considering the environment over the last few years.
What would be some recommendations on what to do with this amount as an investment? Specific names of companies and funds etc would be helpful. We are looking for long-term growth and would not touch money for another 25 years or so.
Thanks in advance.
My dad has a trust that he had set up to help manage some of his business interests. About 5 years ago he put about $950k in an investment account with a regional bank. We have been very dissatisfied with the returns, as the total portfolio is valued at $1,070,000 as of today. Me and my brothers feel like we should be doing better, considering the environment over the last few years.
What would be some recommendations on what to do with this amount as an investment? Specific names of companies and funds etc would be helpful. We are looking for long-term growth and would not touch money for another 25 years or so.
Thanks in advance.
This post was edited on 1/21/17 at 9:12 am
9
Posted on 1/21/17 at 9:45 am to ALTiger
You want to self manage?
Posted on 1/21/17 at 10:08 am to ALTiger
Go talk to a professional. Don't attempt that yourself.
Posted on 1/21/17 at 10:13 am to Saint5446
We have been with professionals with a large regional bank for the last 5 years. Just wanted feedback about where to move to. Would not self-manage. Thinking Fidelity etc. just wanted this boards feedback on what you guys would recommend for this amount of money with a 25 year time horizon.
Posted on 1/21/17 at 10:33 am to ALTiger
Vanguard
Posted on 1/21/17 at 10:56 am to ALTiger
You've come to the right place -- everyone here averages 5% returns 
Posted on 1/21/17 at 11:12 am to ALTiger
quote:
We have been with professionals with a large regional bank for the last 5 years. Just wanted feedback about where to move to. Would not self-manage. Thinking Fidelity etc. just wanted this boards feedback on what you guys would recommend for this amount of money with a 25 year time horizon.
The only "bank" I would ever consider hiring to manage investments would be JP Morgan, and maybe US Trust via Bank of America. And even with those two, they LOVE to sell their own funds to you, which often come with high internal expense ratios.
You need a good independent registered investment advisor. Someone who's fee is a percentage of assets.
Fidelity, Vangaurd, etc, I would not use them for managed investments.
Why the 25 year time horizon? That's a really long horizon, are you just trying to grow money for the next generation of the family?
Posted on 1/21/17 at 11:25 am to LSUFanHouston
That's the type of feedback I am looking for. 25 year because we have no need to touch money as long as my father is alive, and he will continue contributing money to this account over the next 20 years or so. We have just been disappointed with the returns we have experienced vs the indexes.
Posted on 1/21/17 at 11:47 am to ALTiger
quote:
We have been with professionals with a large regional bank for the last 5 years.
More often than not banks are not considered professionals when it comes to investment management.
Posted on 1/21/17 at 12:04 pm to ALTiger
Do you have a CPA or know of a good one? I'd probably trust their recommendation if you do. That might be a good starting point.
Posted on 1/21/17 at 12:09 pm to ALTiger
quote:
We have just been disappointed with the returns we have experienced vs the indexes.
What are you paying the bank? do you pay them a percentage of assets or are you paying commisssions and high internal fund fees?
I guess I'm asking, has it been poor investment choices, or high fees, that is killing your return? Or both?
Posted on 1/21/17 at 12:46 pm to ALTiger
There must be a substantial fixed income component to your current asset allocation. $120,000 in five years on $950,000 is about a 2.5% average annual return. I averaged about 7% for the last 5 years with a 60/40 Equity/Fixed Income allocation. A 2.5% return would make sense if you were 100% in fixed income. If your time horizon is 25 years, you should have a substantial % in equitites.
Vanguard is good, but I just compared several Vanguard funds I was using to to Fidelity funds and the fees were about a half basis point less with Fidelity. That's $5000 a year on $1,000,000, so I made the switch.
Vanguard is good, but I just compared several Vanguard funds I was using to to Fidelity funds and the fees were about a half basis point less with Fidelity. That's $5000 a year on $1,000,000, so I made the switch.
Posted on 1/21/17 at 12:49 pm to ALTiger
quote:
. About 5 years ago he put about $950k in an investment account with a regional bank. We have been very dissatisfied with the returns, as the total portfolio is valued at $1,070,000
Baby jesus, that is abysmal over the last 5 years. An ETF in the S&P 500 over this time period would have netted 700k
Posted on 1/21/17 at 12:59 pm to barry
The OP has to have a fixed income portfolio. Or somebody needs to get fired quick.
Posted on 1/21/17 at 1:00 pm to ALTiger
you have to know what investment guidelines the bank was operating under to make return assumptions.
Just stay away from anyone registered with a broker/dealer ( a broker). Use an RIA with a track record of good fee based investment results.
Just stay away from anyone registered with a broker/dealer ( a broker). Use an RIA with a track record of good fee based investment results.
Posted on 1/21/17 at 2:12 pm to tigeryat
Yes we have about $80k in fixed income, the rest in securities. It is trough a bank, but it is the asset management arm of the bank doing our investing. Fidelity is along the lines of what I am thinking. We paid about $10k in fees last year, so I looks like we are paying about 1% of assets in fees.
We just feel like we should be getting much better returns based on what the indexes alone have done over the last few years.
Thanks for all the responses!
We just feel like we should be getting much better returns based on what the indexes alone have done over the last few years.
Thanks for all the responses!
Posted on 1/21/17 at 2:51 pm to ALTiger
If you only have $80k in FI and only returned that much, yeah, I'd definitely be asking questions.
Have you talked to the bank to the see if they have an explanation on why your assets are underperforming the market?
If it was me personally, I'd look into spreading about 200k in 3 equity funds, 200k in a FI fund, and the remaining in a diversified strategy fund. You would need to reevaluate your allocation every so often upon reassessment of your goals.
Talk to your professionals now, then shop new ones if you don't like what they have to say.
Have you talked to the bank to the see if they have an explanation on why your assets are underperforming the market?
If it was me personally, I'd look into spreading about 200k in 3 equity funds, 200k in a FI fund, and the remaining in a diversified strategy fund. You would need to reevaluate your allocation every so often upon reassessment of your goals.
Talk to your professionals now, then shop new ones if you don't like what they have to say.
Posted on 1/21/17 at 3:30 pm to ALTiger
How much is in alternatives? Any hedged or future positions?
Posted on 10/26/20 at 4:06 pm to ALTiger
Vanguard
Posted on 10/26/20 at 4:58 pm to ALTiger
quote:
We paid about $10k in fees last year, so I looks like we are paying about 1% of assets in fees.
That’s higher than the going rate for an actively managed account.
eta: fees to manage the account or fees on the transactions?
This post was edited on 10/26/20 at 5:00 pm
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