I manage an account, not large, but I'm very active on it. I buy and sell shares on a nearly daily basis. I generate trading income for the bank in excess of 3% of the assets. That's 300bp. Any bank dreams of such customers, believe me.
So today my moronic account manager (just happens to be a woman) sends me prospectus for some fund the bank is going to launch. They charge 1.6% a year for it, plus a 2.5% subscription and 0.5% redemption fee. The subscription fee is waived if I subscribe untill febuary....
Now this prooves a couple of things to me:
1.) The account manager has no fucking idea how much I generate in commissions.
2.) Why would someone managing an account actively, generating 300bps a year, be told to subscribe to a fund on which the bank earns 160bps?! I couldn't trade as actively anymore...
3.) Banks are so keen on stuffing your account with their daft actively managed funds, that they don't even notice if they'll be earning LESS if they sell them to you...
An ETF has a yearly charge of 0.4%. Knowing that most active funds, especially at banks, don't beat the index, why in gods name would I pay 4! times more for it....
And that my friend is why I think these big banks deserve to go bust. They are feeding off us, not paying any attention to what's best for us!!
*rant*
:-) Happy New Year!
