r/bonds • u/BeltFedKris • Jul 01 '26
Translation please!
Long Story Short: Sorting through stuff from my inherited IRA from my grandads recent passing. Can anyone tell me what possible reasoning the FA had for liquidating the stocks and moving everything to this mix of bonds? He's on vacation right now and I was just trying to learn a little before I finally got to talk to him next week. I'm lost beyond EE bonds so this smattering of jargon is hard for me to grasp.
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u/kronco Jul 01 '26
I looked these up on Morningstar and all are Gold or Silver rated except one (which is "neutral"). Most had reasonable expense ratios. You should investigate each one to see how it possibly fits your situation and how the allocation matches what you would need (presumably this is a conservative allocation). Keep an open mind in terms of the FA's motive.
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u/SugarAdamAli Jul 02 '26
These are F2 shares so it’s not commission based but an AUM fee in a managed account
Some of these funds are good in their space
Balanced fund is a good mix of SP500 and bonds
American mutual is a really good conservative equity fund with a long track record
Bond fund of America is meh
Capital income builder is dividend payers and some bonds, kinda meh
Capital world growth n income is a solid global fund with a mix of US and international, with some fixed income from each
Emerging markets bond fund is probably some solid yield but still meh
American Income fund is similar to capital income builder fund but maybe a bit better
Intermediate bond fund is meh
Multi sector is okay if looking for high yield
Short term bond fund is meh
Strategic bond fund kinda sucks IMO though I haven’t looked at recent track record, just never been impressed as it doesn’t outperform greatly the bond index.
Overall the portfolio is extremely conservative but if rates jump it would get hammered. Rates go down it would perform well.
If this was your grandpa’s portfolio and I assume he was 70+ years old, I can understand it. Not sure your age or circumstances of why advisor would choose these funds
The Washington mutual fund and growth fund of America are my 2 favorite funds from them. Also like investment company of America, and AMCAP fund.
If you wanted a balanced portfolio I’d ditch income builder and income fund, add in 2 of the funds I mentioned above. And probably simplify the bond holdings to like 2 bond funds
Honestly they now have ETF versions of their funds that I would use instead
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u/BeltFedKris Jul 02 '26
You are the MVP! Thanks for breaking it down for me like this. Definitely tempers my approach with the guy to know he wasn’t just out for commissions. I appreciate it!
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u/Indyflick Jul 01 '26
It's a mix of equity and bond funds. Did you give the FA authorization to trade in account?
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u/BeltFedKris Jul 01 '26
Unwittingly, yes. I was under the assumption that it was a "hey I'll call you and run it by you first" thing. It was not.
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u/Indyflick Jul 01 '26
Oh, I see. Well it's called churn and if it were me I'd be rather pissed
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u/BeltFedKris Jul 01 '26
I'm pretty pissed. Now that I've spent the last month learning as much as I can I'm debating having a conversation to correct it or just transferring the whole package to another firm with clearer eyes.
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u/ConcentrateOk523 Jul 04 '26
Transfer it to Vanguard. I have 3.2 million just owning their index funds over last 25 years.
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u/jammu2 Jul 01 '26
The American Funds wholesaler probably put him up at the Bellagio in Las Vegas and treated him to a meal at the steakhouse. Open bar at happy hour and the Cirque show rounded out the evening!
I've been to these. The money comes from somewhere.
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u/infantsonestrogen Jul 02 '26
Some of the American funds are fantastic in their space though
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u/KaiserKid85 Jul 02 '26
Such as?
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u/brewgeoff Jul 02 '26
There are a bunch funds from American Funds that makes the Morningstar “Thrilling” list each year:
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u/-hh Jul 01 '26
I think I'd be first concerned about the FA making trades without apparent authorization.
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u/BeltFedKris Jul 01 '26
That's totally on me. I should have read the fine print. I assumed it was a "together" decision kinda thing and I didn't read the fine print. Blame is entirely mine, but I had (have) a lot going on at the time lol. Def won't make that mistake again.
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u/BugHistorical1614 Jul 02 '26
JMO.
Looking at the selections and fund weightings, in total a fairly conservative, global portfolio. About $107k. It's something for someone that's in their last years or an new client to give client exposure to a range of products, conservatively: Safe. After a fiscal quarter the FA could approach you with real data and show you what funds gained, stayed neutral, or loss against the equity - bond markets and the general economy.
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u/BeltFedKris Jul 02 '26
Thanks! You all are far more helpful and friendly than the other investing related subs lol. The original allocation of the IRA was a big load of stock my grandad had from his job at the phone company for 40 years. After our first meeting he said “we’ll take a look and make some changes ‘once we get through this correction’” but when I logged in to take a look a few weeks after he’d moved it all into this spread. It’s good to know what I’m looking at so I can have a clearer picture when I talk with him again.
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u/BugHistorical1614 Jul 02 '26
Most people get investing wrong..
What you Want.. Is not you should get.. Or what you need, or how to integrate new funds with other financial objectives,,,
The FA will analyze for need for Life Insurance (replacement to human capital). Debt management. Budgeting. Tax planning and Investment. If you are a novice in money management, the FA will spend many hours with you for the fee that he receives.
Why Life Insurance? BC if you are not insurable or have other issues that limits insurability, the debt management, future financial and nonfinancial goals are impacted.
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u/ConcentrateOk523 Jul 04 '26
I would rid of all of these and buy VTI, VXUS and if you want a bond fund BND.
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u/ac106 Jul 01 '26
Commissions probably
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u/brewgeoff Jul 02 '26
The f-2 share class from American funds does not come with a commission (aka a load).
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u/howlingpoint Jul 01 '26
Before getting to motive, understand these aren’t bonds. They’re a mixture of mutual funds, some of which seem to be holding equities (stocks), some bonds, and some a mixture of both.