A.I.M. Users Bulletin Board

[ls7550]

Hi Neko

Lexcx is a mutual fund that has had zero turnover since its inception. In strategizing over its use . In a taxable account I assume there would be no capital gains . Since nothing is ever sold except for redemption of shares as a person sells out their position. The dividends I assume are taxable .

I have come to the conclusion that I don't want to beat the market as much as I don't want to be beaten by the market.

Chase has a fund of funds. They are always selling and buying . It is their conservative allocation fund. It is a fund of funds. Do they make money by constantly buying and selling mutual funds.
My friend had shares in it. He saw little advancement over its value.

You might be interested in this article

Bogle recommends the ultimate in buy-and-hold investing: a completely static portfolio. He would buy the 50 largest companies in the S&P 500 and then never buy another.

Initial equal $ weight each stock looks to be the better choice

The next-to-the-top line is the original Dow 30, using a price-weighted index, just like the current Dow 30 uses. The only changes in the next 80 years are companies getting bought or dying. That "Original 30" gives us an annual return of 9.6%. Just 0.7% a year, so you might think, not much difference. But if you start with $100 and compound it for 80 years, that 0.7% becomes a quite large differential. With the Dow 30, your $100 would have grown to $96,993 as of December 2008, but the Original 30 would have grown to $161,603.

And there is an even bigger differential if you simply equal-weight the components rather than use a price-weighting methodology. Your $100 grows at a 10.4% clip and becomes $272,554, or almost three times the actual Dow 30.

A low cost 'index fund' is BRK-A bought and held. No dividend, no ongoing fees and if never sold then no capital gains tax either (step-up upon death). Holds a diverse range of stocks etc. however does have idiosyncratic (single stock) risk. A shame that other versions aren't also available in order that you might diversify away the idiosyncratic risk.

For funds, even with 0.1% expenses/fees, if the dividend is 3% and you're paying perhaps 15% withholding/dividend tax on those dividends that boosts the ongoing cost to 0.55%/year+ ($28K/year into someone else's pocket if you're up at a $5M portfolio amount is a relatively high cost, albeit a small percentage cost).

Clive.