Hi Keith, Here's more from Robert G. about his Merrill Account that explains things in more depth. He's also said in other correspondence that this account has frequently filled his "GTC" orders at better prices than entered. This extra efficiency goes a long way to pay for the overall "bill" at the end of the year. Here's his letter:
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Tom,
Read your reply to Lemonhead in which you discussed my useage of Merrill Lynch's Unlimited Advantage account on the Silicon Investor boards. Thought that I might clarify things a bit in case you wanted to follow up a bit more with the group.
The MLUA account charges a MAX of 1% on the first $1M in equities plus a MAX of 0.3% on the first $1M in cash, bonds, MMFs, etc. The practical effect is that an AIM investor will rarely pay the 1% fee since that implies that AIM is 100% invested and STARVED for cash to make more buys. A more typical situation will have the total AIM portfolio between 10% and 50% in overall cash. This will indicate a typical fee of about 0.85% to about 0.65%. More than a Vanguard S&P500 index fund, but competitive with a typical actively managed mutual fund.
Yes, my AIM SAFE's and min trades are tighter than the Lichello rules. I am slowly changing several of my AIM stocks to use rules much closer to Lichello's formula, and in a couple of cases, they are already there. Even on my largest holding, TXN, I am using looser trading rules than when it was in the 401(k).
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Further, RG indicates that his 1999 inventory turnover rate in his deferred accounts has been around 100%. He considers this to be a bit high because of market price volatility during the year. He is anticipating something in the 50% to 70% turnover rate in the future as his SAFE values increase and volatility diminishes.
Best regards, Tom |
