How To Make a Fortune in the Investment Business - Part II

Another day, another pitch, this one from a well known name that's sponsored dozens of sporting events over the years. You might say they're a big fish in the investment world.

"Advisors, how will YOU capture rising rates for your clients?"

Well, not much "capture" here.

Fund Performance (as of 6/30/22)

"3 -Class A shares at maximum offering price (MOP) reflect the deduction of the up-front 4.25% sales load.

4 - Class C shares of each Fixed-Income Fund, if redeemed within one year from purchase, may be subject to a 1.00% contingent deferred sales charge (CDSC)."

Imagine being satisfied with returns like this for the past decade. There's over $4 billion sitting in this one, and the fund manager is frequently on CNBC and Bloomberg.

Naturally, Morningstar gave this dead fish Five Stars. Now, the reason for that is within it's investment class, it outperformed other funds in a zero rate investment environment. But again, even with the lowest rates in a generation, a portfolio of short dated government backed paper would have clocked this thing. With no 12b-1 fees to erode your return, or any of the soft money arrangements that pay investment firms with, let's face it, a bribe to push the thing into client portfolios. As mentioned in the original piece, these charges to the investor are not often transparently disclosed.

There are dozens of these things that have filled my inbox over the years. Some come with interviews with the fund managers who tell you about their "disciplined approach," their "macro view," and the like. And it's all puffery and fluff.

If you're being pushed into these things, look elsewhere. Investing is tough enough. No one should spend years regretting missed opportunities for security and wealth building.