Conference nyoss1::market_investing

	Re. .0

	A lot of the Prudential funds are front-end loaded, with the load
	generally in the 3-5.25% range. Your advisor gets a commission from
	them, so obviously, his experience lies with them :-). 

	Performancewise, Prudential funds are not a stand out. You might be
	better off sticking to no-load funds that have a better track record
	than Prudential's. 

	PS. I generally have WSJ in my office. You are not too far off from
	mine. Drop by to have a chat. 

    Ever financial advisor type I've ever heard of (at least in my limited
    experience) recommends funds which turn out to have a load which
    inevitably results in a commision to him/her and which of course,costs
    you money. I'm not saying those funds are necessarily bad. The point is
    that you can do just as well (and some would say "always better") by
    investing in a "no-load" fund. There are a lot of good ones.
    I,myself,wouldn't invest in a "loaded" fund.
    
    Ken

I took a real quick peek at the January Barron's report.  Most of the Prudential
funds had either a 5% front load or a 5% back (redemption fee) load.  I agree
with the previous replies.  If you want to put the financial advisor's kids
through college then go for it...  If you want to put your kids through
college then learn a bit more about asset allocation and mutual fund investing
with a real emphasis on "No Load".

    Look at the TOTAL cost - not just the loads.  There are MANY loaded
    funds that have low total costs, and that have done very well.  
    Do your homework.

    Re. .4
    
    Yes, one would look at the TOTAL cost if the load was low in the 0.5 -
    1.5% range, since the other management costs and 12b-1 fees rarely
    add up to more than 2%. If the load itself is 5%, why even bother
    looking the other costs unless the fund was consistently known to
    deliver superior performance?
    

    But "mgmt fees" can be annual in nature!
    

    What I don't like about "loaded" funds is that the "sales load" is not
    only taken out of whatever money you use to buy into the fund but
    also,money is taken every time you make an "automatic" investment. At
    least,that's what I understand.
    
    Ken

    All "new" money going into a front-end loaded fund is hit by
    the sales charge.  Once that money is in there, it's not hit
    again. 12b-1's hit your total account year after year.  
    For long term investing (10yrs +) a frontend
    load and a 12b-1 are a wash....the funds get their money. nothings
    free.  Over the years, front-end loads will be reduced according
    to breakpoints.  For example, 5% load at the start, once you 10K
    in the fund, you get a 3.5% load, once you get 25K, you get a 2%
    load, etc. until it goes away.
    
    Just start young, dollar cost average, and be patient.
     

    re: .8
    
    I beg to differ with you. There are planty of good no-load mutual funds
    out there. Why should one buy a load fund at all? Front-end load,
    back-end load or 12b-1 are all considered "loads". There are funds out
    there that do not have any of these. You are right about being patient
    with investing, though. However, patience has nothing to do with paying
    someone a handsome commission just for the "privilege" of giving them
    your business. Let me ask this question. What happens if after a year
    you got into this fund and find it to be a real dog. Should you stay
    with this fund and continue to suffer "under performance" of the fund?
    Or, should you pull out and take a hit on the load you've already paid?
    Either way, you loose!!!
    
    Mike

    Eliminate loaded funds from your fund search and you have just eliminated
    some of the best fund managers in the business.  Listen to the original
    noter.  He probably knows nothing about funds, how to get into them,
    what to look for.  His load is paying for a 'service'.  You tip 15%
    everytime you go out to eat don't you because you expect service.
    The typical investor has not the time or patience or resources to
    research fund info and select one.  He is relying on someone's advice
    and service to help him get started.  More power to you if you can pick 
    your own fund! go for it.  Just don't complain to anyone if the fund
    is a dog because you have no advisor helping you over the years, no
    one to keep you informed on what's happening with the fund, no one
    explaining tax consequences to you, no one teaching you dollar cost
    averaging, etc. etc.
    
    p.s. I don't know of any fund that doesn't charge you for investing
    with them.  Most no-loads have 12b-1's.  It's just a matter of pay
    me know or pay me later.
    

>>  He is relying on someone's advice and service to help him get started.  More
>>  power to you if you can pick your own fund! go for it.  Just don't complain
>>  to anyone if the fund is a dog because you have no advisor helping you over
>>  the years, no one to keep you informed on what's happening with the fund, no
>>  one explaining tax consequences to you, no one teaching you dollar cost
>>  averaging, etc. etc.

chances are he or she won't get that service even when they pay the load.  I
agree they ge advice going into the investment, but the chances are their 
account will get moved to a junior manager as soon as the original broker makes
enough sales to move up the corporate ladder.  I've talked to a number of people
who signed on with these people, and within a month they had another broker
assigned to their account (the original broker either didn't work there anymore
or moved on up).  

I guess the thing I don't like about loads is that they can't be reflected in
the return numbers of the fund....at least management fees and 12b-1's are.

michael

	Re. .10

	> His load is paying for a 'service'.

	Why should one pay the load when comparable or often even better 
	service is available for free elsewhere?

	> Most no-loads have 12b-1's

	This is not true. Most don't, and some that do have are trying to
	get rid of them, given the negative press around this fee. But even
	some loaded funds have 12b-1's. 
	
	> You tip 15%
    	> everytime you go out to eat don't you because you expect service.

	Lousy analogy! Since tips are expected at all eating places, there
	is no competition from some no-load equivalents (I'm assuming
	that fast-food places are not competitions to the restaurants.) If
	there were restaurants that do not allow guests to pay tips and still
	serve good food, you can imagine what will happen to the others. 

	BTW, tipping waiters and cabbies is unknown in most civilized 
	countries, but that's a rathole. 

do you know, or could you ask the representative a question about switching
between two Prudential funds.  Say you are in a growth fund, and your needs
change, or your "advisor" suggest you switch to a growth and income fund.  Do
you have to pay the load on the money that is transfered into the growth and
income fund?

michael

    Re Load funds
    
    Paying a load HAS NO BEARING ON GETTING AN INVESTMENT ADVISOR!!!!
    
    If someone wants/needs someone ELSE to select funds, recommend
    timing/switching strategies, etc, etc, etc than that person should
    interview and select an investment counseler who will charge them a fee
    independent of the loads of any particular funds, or charge a flat % of
    the assets being managed.  I have never seen any documentation that
    load funds outperform no-load funds. Why give up 4% - 8% in upfront
    fees for no benefit.
    
    If you want someone to pick your investments, that will cost. It just
    doesn't make any sense to me IMHO to pay a (significant) load. I've
    found Janus, 20th Century, Vanguard, et al to do just fine, thanks. 

    Geez,I may be a financial dummy but even *I* can understand
    plain,simple arithmetic. If your "good old fund" is taking a 5% piece
    of the pie on every deposit and if said fund is earning a "decent 15%"
    then *your* return is 10% on that money! (for 1 year) Yeah,I suppose if
    you leave the money in the fund for awhile,the loss will be made up.
    But lets take someone like me who does the "automatic" deposit thing.
    (like my IRA) You'll eventually take the money out. (maybe even close
    the account) There is money you've put in right near the end which
    certainly didn't earn the current return.
    
    Ken

    
    I'm with the no-loaders; I can't see any reason to pay more without
    getting more or risking less.  Can any of the loaded-fund advocates
    suggest a (short) list of loaded funds that have outperformed a similar
    (short) list of no-loaded funds over a 5 year period (adjusted for
    risk, after all loads & fees, with reinvestment of dividends).
    
    btw, on advisors: I recently called a local branch of Merrill Lynch to
    request some information (I don't have a broker there).  I spoke with a
    very congenial gent (a broker) who just couldn't remember what "Beta"
    was.  Nice guy, but I wouldn't pay much to have _him_ hold my hand!!
    Sooo, you pay for what you get, but you don't always get what you pay
    for.
    
    /Jim
     

    
    WHats 12b-1?
    
    

    A yearly charge on your account, not for "management" but for
    advertising expenses.
    
    Just add all the yearly expenses together--from a user point
    of view what they call them doesn't matter.
    
    As a rule of thumb for judging total yearly expenses:
    
    	1% or less is good, 
    
    	1% to 1.5% is ok, 
    
    	1.5% to 2% is questionable 
    		(it'd be ok only if there's some good reason--an
    		 example would be in emerging market fundss, where
    		it's expensive for the manager to get information
    		and trade),
    
    	over 2% is too much!
    		(unless you're dealing with a "hedge fund", where 
    		 you're paying for hourly management of your 
    		 over-one-million-dollar investement and you're 
    		 getting 40% or more per year for your payment).
    
    Vanguard tends to have the lowest fees.
    
    		-John Bishop

    You guys are missing the point.  I'm not saying loads or no-loads are
    better.  I'm saying, the original noter was approached by someone to
    start some mutual fund investing.  He asks about the funds in this
    notesfile and is told no-way, don't pay any sales charges, go pick your
    own funds and make sure they are no load, make sure they have no 12b-1,
    make sure they have low management fees, make sure they have a good
    track record.  So he reads these replies and decides against the Pru
    funds and gives up on starting an investment because its just too 
    complicated to figure that all out.  All he wanted to do was start 
    dollar cost averaging into a 'decent' fund somewhere.  You guys are 
    experts.  MOST PEOPLE ARE NOT.
    
    The answer should be, take a look at the charges.  Ask the
    representative to explain the charges.  If you are not comfortable with
    them, then look somewhere else.  If you are comfortable with them, then
    START NOW, DOLLAR COST AVERAGE, and you will do fine.  Whatever you do,
    don't keep your money in the 2% bank account because someone told you
    a 5% load was bad.

>>    The answer should be, take a look at the charges.  Ask the


more appropriately for the true novice.....be aware that there are charges, ask
what you get for those charges....ask the rep how long has he been working with
customers...of the custormers that he does work with how many did he sign up,
how many did he inherit from other brokers, how long did the other broker
work with these customers....how much would $1000 invested 5 years ago be
worth now?  If I changed my mind after the first year and moved it to a growth
and income fund how much would it be worth now....how does your service differ
from say the service that Fidelity provides?

sales loads on these kinds of funds are the gift that keeps on giving...giving
your broker a better standard of living.

/mtb

    The investor makes a lot more money on his investment, than does
    the broker for setting up that investment for him and for convincing
    him to start now.  Every full IRA account ($166.66/month) that 
    a broker sets up will pay him about $50 bucks a year.

    I, personally, don't like investment advisors who get paid a
    "commission".  Some are responsible professionals, but some are going
    to suggest funds that provide them with better commissions.
    
    Some of the large firms charge a flat percentage, regardless of fund
    type, so at least the broker doesn't have any conflict of interest.
    
    Better, I believe, is to find a professional advisor who will charge a
    fee ($x/hour, or a flat fee for a consultation) and who doesn't make
    any money on commissions.  This way there is no potential conflict of
    interest.

    If you believe you need financial advice to get started in funds, by all
    means go out and hire a financial advisor and pay them by the hour
    exactly the way you would a shrink. How much faith would you have in a
    doctor that said pay me now and I'll make you well. If you want really
    sound advice on mutual funds, go to the library and study Morningstar's
    ratings and if you don't understand them, pay someone for help there.

Morningstar 500 (this is a list of 500 funds that Morningstar considers the
"cream of the crop" for each category) lists 4 Prudential Funds

In the Conservative Stock Funds:  Prudential Utility B....last year it returned
15.34%, annualized 3 year return of 14.38%, annualized 5 year return of 13.93%,
and annualized 10 year return of 18.14% (which was the best on their short
list).  The fund has an average 4.7 stars over it's lifetime, and is currently
rated 5 stars.  The fund as a tax exposure of 19.2%, an expense ratio of 1.57%
(which includes a 12b-1 fee), and a 5% deferred sales charge.  It has been
managed by Warren Spitz for 6 years.

In the Hybrid Funds:  Prudential Flexible Conservative B..last year it returned
13.84%, annualized 3 year return of 13.78%, annualized 5 year return of 11.85%,
and hasn't been around for 10 years. The fund has an average 4.0 stars over it's
lifetime, and is currently rated 4 stars.  The fund as a tax exposure of 12.2%,
an expense ratio of 1.97% (which includes a 12b-1 fee), and a 5% deferred sales
charge.  It is managed by a team. 


In the Limited-Term Bond Funds:  Prudential Govt Interm-Term....last year it
returned 7.19%, annualized 3 year return of 8.84%, annualized 5 year return of
9.17%, and annualized 10 year return of 9.85%.  The fund has an average 3.7
stars over it's lifetime, and is currently rated 3 stars.  The fund as a tax
exposure of -17.4% (it has carried over losses), an expense ratio of 0.80%
(which includes a 12b-1 fee), and no deferred sales charge.  It has been
managed by Kay Wilcox for 2.3 years.

In the Limited-Term Funds:  Prudential Strucutred Maturity A..last year it
returned 7.03%, annualized 3 year return of 8.90%,and hasn't been around for 5
years. The fund has an average 3.8 stars over it's lifetime, and is currently
rated 3 stars.  The fund as a tax exposure of 2.2%, an expense ratio of 0.83%
(which includes a 12b-1 fee), and a 3.25% deferred sales charge.  It has been
managed by Annamarie Carlucci for 1.8 years.

Source:  Moringstar 5 Star Investor January 1994 issue.

not resposible for typos.

michael

    re: -1
    
    That's not how front end loads work!  The 5% charge is only on
    NEW money going in.  Not like a management fee that hits the fund
    year after year.  If someone invests 10k and pays $500 bucks for the
    front end load, they lose 5% of the funds return the FIRST YEAR ONLY.
    After that, they get the full return on their money.  Front end loads
    do not include reinvested dividends or capital gains either.
    
    If the person is DCA'ing, say $100/month.  Each year, $1200 is hit
    with a 5% load.  So if the fund is averaging 12%, their new money
    only gets 7%, their existing account balance gets the full 12%.

and as you can see, the funds have a management fee that is right in line with
the industry....NOT LOWER.....so their charging you to buy the fund, and then
again to manage it!.....what about the tranfer between funds?....do they charge
the load again upon entering the new fund?

/mtb

Re: .26

>     That's not how front end loads work!  The 5% charge is only on
>     NEW money going in.  Not like a management fee that hits the fund
>     year after year.  If someone invests 10k and pays $500 bucks for the
>     front end load, they lose 5% of the funds return the FIRST YEAR ONLY.
>     After that, they get the full return on their money.  Front end loads
>     do not include reinvested dividends or capital gains either.

Some funds, such as Franklin, charge a load on dividend reinvestments.
There is no standard rule for the definition of loads, etc.
You should read the prospectus to get the details.

Gim