WHO SHOULD OWN
Those in the highest tax brackets typically benefit from the ownership of municipal bonds, as they are one of the most reliable sources of safety, liquidity, and tax-free income. Municipal bonds should be viewed as a core holding for the portion of assets for which the risk tolerance is low. Other asset classes can be employed to secure higher potential growth.
For individuals with less than $2mm to invest, mutual and exchange traded funds offer investors professional management and the all-important diversification they would be unlikely to attain otherwise. Clients, on the other hand, looking to preserve great wealth are most often far better served by owning a portfolio of individual bonds.
SHOULD YOU HIRE A PROFESSIONAL BOND PORTFOLIO MANAGER?
Most individuals have insufficient time, knowledge, and resources to manage a bond portfolio effectively. Since there is not a central exchange for the thousands of bonds that are available on any given day, establishing an accurate price on any bond is extremely difficult. Opinions vary widely and an unskilled investor can easily pay far too much for a bond. They may even be buying unsuitable bonds.
Hiring a knowledgeable and well-connected professional with extensive “street” relationships increases the universe of bonds available allowing the manager to negotiate optimal prices on your behalf. Astute managers typically earn their keep by minimizing the bid-offer spread, even before their time-tested processes and market strategies are employed.
WHAT IS THE DIFFERENCE BETWEEN AN RIA AND A BROKER-DEALER?
Registered Investment Advisers (RIAs) have a fiduciary duty to act in their client’s best interest on an ongoing basis, as opposed to broker-dealers who are required to recommend “suitable” investments at the time of sale. Yes, it is possible for an investment to be suitable but not in one’s best interest. Broker dealers are not portfolio managers and often will sell from their own inventories, creating serious conflicts of interest. RIAs are paid fees, typically based on the
market value of assets under management.
This arrangement aligns the interests of the provider with the interests of the client and removes the provider’s need to make the next sale. Think of RIAs as personal shoppers able to choose from multiple sources versus being restricted to one or two stores.
MANAGER BE CFI?
CFI professionals are municipal bond specialists with decades of experience. Our close association with dozens of municipal bond firms across the country enables us to acquire the most suitable bonds for each client and to execute buy and sell transactions at optimal prices. Pending regulation, litigation, and fiscal policies are poised to make it even more important to use advisors that possess long term experience and a demonstrated skill in anticipating and dealing with the ever-changing markets. CFI is such a firm and we have earned the trust of our clients.
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It is no use saying, ‘We are doing our best.’ You have got to succeed in doing what is necessary.
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Irvine, California 92606
Phone: 949 296 3970
Charles Fish Investments, Inc. (CFI) founded in 1984, is a Registered Investment Advisor with the Securities and Exchange Commission under the Investment Act of 1940 and notice filed with the California Department of Business Oversight. The firm, which is wholly-owned by its employees, is not affiliated with any broker/dealer. CFI's revenues are derived exclusively from the fees received for the investment advisory and/or management services provided.
ADV Part 2 A
ADV Part 2 B
Portfolio vs Funds