Author Topic: GUNR, your thoughts and opinions please  (Read 884 times)

Watertree

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GUNR, your thoughts and opinions please
« on: April 15, 2018, 05:36:03 PM »
I am an index funds investor guy with Schwab and Vanguard index funds. My financial advisor, independent assets under management, is recommending a fund I really don't understand. GUNR  is a FlexShares Morningstar Global Upstream Natural Resources Index Fund. FlexShares states this is a balanced exposure to three traditional (30% each in agriculture, energy and metals) and two non traditional (5% timber and water) natural resources sectors.

Financial Advisor is recommending GUNR to buy after selling MLPZX. MLPZX was 6% of total account assets. All Schwab and Vanguard index funds have and are doing well. My thoughts are just buy more index funds, which I understand, or take a chance with GUNR. In researching GUNR, I noticed Vanguard has VAW which is MSCI US investable market materials 25/50 index. Whatever that is?

Need thoughts and opinions about going forward with GUNR  or VAW in IRA  account. Thanks in advance!

Watertree

seattlecyclone

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Re: GUNR, your thoughts and opinions please
« Reply #1 on: April 15, 2018, 07:06:18 PM »
Go with your gut. Buy index funds.

FIREJD2B

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Re: GUNR, your thoughts and opinions please
« Reply #2 on: April 15, 2018, 08:13:03 PM »
Do you have a principled reason for buying that sector fund? Ideally you would have an Investment Policy Statement which answers these sorts of questions, but absent such a formal plan, is there any articulable reason that YOU would put your money into that fund instead of index funds? See: https://www.bogleheads.org/wiki/Investment_policy_statement

If you want to discover a probable reason the fund looks attractive to those recommending it to you, I'd suggest researching the fees.

A cursory examination reveals a purported gross expense ratio of 0.47%. That is ten times VTSAX's fee. See: https://www.flexshares.com/funds/GUNR.
« Last Edit: April 15, 2018, 08:15:46 PM by FIREJD2B »

Radagast

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Re: GUNR, your thoughts and opinions please
« Reply #3 on: April 16, 2018, 07:11:42 PM »
Let's look at the past performance of the funds mentioned so far, plus intermediate term government bonds (VGIT), international stocks (VTIAX), and very long term government bonds (EDV) to see how they compare.


My big concern is not GUNR, it is MLPZX. Why did Financial Advisor (FA) put you in MLPZX? MLPZX has an expense ratio of 1.11%, which is just too high. I also notice that it has done more poorly than most other investable assets over the past four years or so. Why is FA selling now? If it was a good idea in the first place, shouldn't FA be buying more? If it was not a good idea, why did FA put you in it in the first place? Why is FA selling now? Is FA just a performance chasing moron who has no idea what will do better in the future, but is happy to use your money to buy high and sell low, giving you less money? I feel you need to scrutinize FA most of everything here. MLPZX with an expense ratio of 1.11% does not seem like a good idea, and selling likely at a loss drives home the stupid point.

GUNR has an expense ratio of 0.47%, which is a little high but not extreme. A rational person might be able to make a case for it, but the question is, is your financial advisor a rational person? More scrutiny, and an emphasis on low expenses and a buy-and-hold mentality, is advised.

MustacheAndaHalf

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Re: GUNR, your thoughts and opinions please
« Reply #4 on: April 17, 2018, 08:57:54 AM »
Even after the expense waiver, MLPZX costs you 0.95% per year.
http://financials.morningstar.com/fund/expense.html?t=MLPZX&region=usa&culture=en_US

Your financial adviser doesn't seem sensitive to your desire for lower cost index funds.  I'd recommend giving "A Random Walk Down Wall Street" a read so you have more data showing why index funds can work so well.  That might also let you make decisions without feeling that your financial adviser's decisions are better informed than the market's.

Cycling Stache

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Re: GUNR, your thoughts and opinions please
« Reply #5 on: April 17, 2018, 09:37:54 AM »
@Watertree I think you need to fire your FA.  You are getting some terrible advice as the chart by @Radagast shows.

Agreed.  What special knowledge does your FA have that GUNR will outperform general index funds like VTSAX over the next 1 year/5 year/10+ year period?  And is the same special knowledge that allowed him (or another FA) to see that MLPZX would outperform index funds like VTSAX for the last few years?

Hint: There is no such special knowledge.  And it's costing you additional money in the form of higher expense ratio to lose money compared to VTSAX.

That is not a good idea.

Watertree

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Re: GUNR, your thoughts and opinions please
« Reply #6 on: April 24, 2018, 12:23:14 PM »
Thanks to all who offered their advice and thoughts.

Watertree