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Costs-Do You Want Retail or Wholesale?

At quarter end we took the opportunity to add some new asset classes, change funds that were underperforming, add new fund managers, and adjust our long-term allocations. Essentially, we made changes that we felt were necessary to improve your investment portfolio and adapt to the changing investment landscape. Some of you may have noticed that several of these funds may have had transaction fees associated with them.

Over the last few years, the cost of accessing the No-Transaction Fee (NTF) Platforms at Schwab and Fidelity has increased from 0.20% to 0.35% of a typical fund expense ratio. In addition several mutual fund companies have opted not to participate in the NTF platform, which has resulted in only 25-30% of the mutual fund universe now being available through the NTF structure. Investment companies still make their mutual funds available to advisors, but often through an institutional or advisor share class. These institutional share classes typically have expense ratios that are cheaper by 0.35% or more than what is available on a no-fee basis or through retail channels, and often have investment minimums of as much as a $1 million, which we are able to meet in the aggregate.

As you know, we are not day-traders; we are long-term investors, with at least a one to three year horizon for new investments. We always seek to use the mutual fund share class that results in the lowest cost to you over the long-term. For example, a $10,000 investment in a fund with 0.35% lower expenses saves $105 dollars over a typical 3-year holding period, far outweighing a $20 fee.

In addition, and perhaps even more important, several of our most successful funds have closed to retail investors and are only available through existing advisor accounts. Whether it is providing access to these closed or institutional funds, or no-transaction funds, or low-cost exchange traded funds (ETFs), our goal is always to provide you the best investment with the lowest cost of doing business over the long-term.

If you have any questions at all please do not hesitate to call!

Have a great day!

Bob and the All Star Team

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