Welcome John R Ruocco Asset Management Associates South Windsor, CT.
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Transcript of Welcome John R Ruocco Asset Management Associates South Windsor, CT.
Variable Annuity• Steep redemption fee (commission)
• M&E of over 2% per year• 1% advisory fee – deducted from account
• Automatic trading system – multiple trades monthly
• .75% advisory fee billed in addition to above.
• Market in uptrend – account losing money (years)
Evolution
• A shares
• B shares
• C shares
• Fee based “boilerplate plans” sell the abc’s
• Wrap and managed accounts (many use etfs)
• Very little has changed!
History• Crash of October 1987• Meltdown of Japan
– Highest Mstar Rating in 1990 - high exposure to Japan
• Junk Bond Meltdown – Milken - DBL• Savings and loan scandal • Real Estate Partnership Meltdown early 90’s
– Colonial Realty ( S&L Crisis)
• Oil – T. Boone Pickens– Tech – Dotcom Bust (ditto – morningstar) – 9-11– Financial Meltdown of 2008, MM Freeze– Bernie Madoff and Mini Crash May of 2010
Investment Background• General Sales Background
– Learned rapidly, sales driven business.– Fee structure seemed very high– Investment advice - secondary
My objective
• Simple – straight forward way for average person to invest a clients money.
• --- and get paid a reasonable fee to do it.
Early Years (1980’s)
• Created portfolios using “No Load” funds for individual clients.
– High liquidity– Low fees– Good performance– Good diversification ( minimal trading) – Fees about 1% or less– Way ahead of the crowd
Note: Fidelity was the first to create multiple “sector funds”.
ETF’s
• Natural Transition Extension for:– Sector Exposure– Liquidity– Transparency– Easy to isolate risk (offset / balance risk)
– Easy to create portfolios for clients combining funds and ETF’s
I- Shares and others
• Opens the door to many markets and sectors.
• Bonds
• Country specific, regional, Int’l
ETF - Ideal for Client Profile
• Business owners, professionals with 200k to 2 million or so in investable assets. Growing.
• Small pensions, SEP’s, DB plans, IRA’s Trust accounts.
Common Sense
• People lose tons of money because they deviate from common sense
• They look for high returns– viaticals
Stick With Basics
•Mainstream Investments•Highly Liquid•Transparent: Easy to understand•Solid Management (Reputable Management)•As close to Vanilla as possible
Avoid Losses
• What is the Risk?
• How can we lose money?
• How much can we lose?
• Can we offset the loss with something else?
ETF Advantages
• Transparent
• Low cost of holding – low transaction fee via discount broker.
• Very easy to purchase
• Easy to isolate risk– Since Set of Homogeneous stocks
• Very Liquid • Controls via stop and limits etc• Ideal as building blocks for a portfolio
Favorites
• Select sector “SPYDERS”
• Bond ETF’s – Junk, Treasury – long/short duration
• International – Broad – and country specific, Emerging Markets– Metals: Gold, silver, Commodities oil – Usually use large more liquid etfs….with mainstream
underlying securities.