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Friday Financial Five – December 13th, 2013

Friday, December 13, 2013

 

Congressional budget deal moves forward

The budget deal won’t address many of the long term financial problems the country faces, but the fact that Congress was able to agree on anything should be seen as a positive. After the recent government shutdown, the inability to come to some budgetary accord might have made Congress less popular than the winter flu. As it stands, they’re tied. The deal didn’t address corporate tax breaks, entitlement spending or the debt ceiling, but it prevents automatic spending cuts important to both sides of the political aisle. There’s plenty of work to be done, but at least there’s finally a budget in place.

Facebook to join the S&P 500

Thanks to a market capitalization over $100 billion, Facebook shareholding friends will soon be part of the S&P 500. The company becomes part of the S&P on December 20th, replacing Teradyne. News of inclusion in the index has been good for those owning the stock, as shares have seen a nice bounce since the announcement. Lost in the sea of good news is that the company still has a minimal earnings per share.

Still time to get RMDs processed

For those needing to beat the December 31st deadline, there’s still time to get Required Minimum Distributions squared away. For active employees, remember that the RMD calculation includes SIMPLE IRAs, but does not include 401(k) participants. The penalty for missing the withdrawal can be punitive. The amount not withdrawn is taxed at 50%, unless the IRS grants an exception.

The Volcker Rule is finalized

Following the financial crisis, former Fed chairman Paul Volcker suggested banning proprietary trading and limiting the use of hedge funds by banks. This week, the Volcker Rule has finally been approved by the five federal agencies necessary to implement the rule effective April 1st, 2014. While there are numerous exclusions to the rule, there is also increased compliance, including a requirement that bank CEOs attest to compliance with the rule.

The rise of socially conscious “B” Corporations

A relatively new business structure is the “B” Corporation, available to companies that have a well defined social mission. While “C” and “S” corporations routinely answer to the companies’ shareholders, “B” corporations have a duty to the environment, community, and their employees. The company must also publish financial reports and reports of social accomplishments that coincide with the stated mission. The expectation here is that these companies will focus primarily on transparency and the greater public good as opposed to the bottom line. There are currently a handful of states that allow the formation of this type of company, while others are expected to get on board soon.

Dan Forbes is a regular contributor on financial issues. He is a CFP Board Ambassador. He leads the firm Forbes Financial Planning, Inc in Providence, RI and can be reached at dforbes@forbesplanning.com.


Related Slideshow:
See How Much Providence Pays in Pension Fund Fees

Per investment information obtained by GoLocal, the following are the management fees paid by the City of Providence Employees Retirment System (as of April 2013 -- Graham Global funds were moved at the last city Investment commission meeting).  

Prev Next

Manager: Halpern Denny III

Manager Effective Fee: 0.0%

Asset Class: Private Equity

Assignment: Private Equity

Market Value: $188,318

% of Total Fund: 0.1%

 

Note: Fund is in liquidation.

Prev Next

Manager: William Blair VII

Manager Effective Fee: 0.0%

Asset Class: Private Equity

Assignment: Private Equity

Market Value: $434,649

% of Total Fund: 0.2%

 

Note: No further management fee is charged in 2013 other than a $2000 charge anticipated from January 2013 to mid March 2013. Fund is in liquidation.

Prev Next

Manager: SSgA Russell 2000 Growth

Manager Effective Fee: 0.08%

Asset Class: Equity Managers

Assignment: Small Growth (Index)

Market Value: $10,415,062

% of Total Fund: 3.9%

 

Note: Subject to $10,000 min annual fee.

Prev Next

Manager: SSgA Russell 1000 Growth

Manager Effective Fee: 0.08%

Asset Class: Equity Managers

Assignment: Large Growth (Index)

Market Value: $6,811,160

% of Total Fund: 2.6%

Note: Subject to $10,000 min annual fee

Prev Next

Manager: Vanguard MG ETF

Manager Effective Fee: 0.10%

Asset Class: Equity Managers

Assignment: Mid Growth

Market Value: $7,635,410

% of Total Fund: 2.9%

Prev Next

Manager: Invesco Venture Fund III

Manager Effective Fee: 0.25%

Asset Class: Private Equity

Assignment: Venture Fund of Funds

Market Value: $1,627,627

% of Total Fund: 0.6%

Note: Fee reduced to 0.25% in Q4-2013.

Prev Next

Manager: Columbia (Fleet)

Manager Effective Fee: 0.30%

Asset Class: Cash

Assignment: Large Value

Market Value: $397,606

% of Total Fund: 0.1%

Note: Subject to $15,000 min annual fee.

Prev Next

Manager: Columbia (ValuePath)

Manager Effective Fee: 0.37%

Asset Class: Equity Managers

Assignment: Large Value

Market Value: $20,453,356

% of Total Fund: 7.7%

Note: Columbia (Value Path): 0.40% on first $10m/0.35% on next $15m/0.30% on next $75m/0.25% on remainder.

Prev Next

Manager: Mellon (Prov Group)

Manager Effective Fee: 0.50%

Asset Class: Equity Managers

Assignment: Large Growth

Market Value: $6,641,213

% of Total Fund: 2.5%

Prev Next

Manager: Renaissance Installation Equity Fund

Manager Effective Fee: 0.50%

Asset Class: Hedge Funds

Assignment: Long/Short Equity

Market Value: $34,779,679

% of Total Fund: 13.0%

Note: Additional performance fee of 10%.

Prev Next

Manager: Q-BLK (Quellos) Strategic

Manager Effective Fee: 0.50% Min

Asset Class: Hedge Funds

Assignment: Fund of Funds

Market Value: $11,120,033

% of Total Fund: 4.2%

Note: The quarterly advisory fee paid to the Investment Manager is 0.1250% (0.50% per annum) of the Fund’s net assets on a quarterly basis when the Fund’s quarterly return is equal to or less than the return on the 90-day US Treasury bills plus 1.25%. The advisory fee will ratably increase, depending on the Fund’s performance, up to a maximum of 0.6250% per quarter (2.50% per annum).

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Manager: Rogge Global Partners

Manager Effective Fee: 0.65%

Asset Class: Fixed Income

Assignment: Foreign Bonds

Market Value: $14,033,078

% of Total Fund: 5.3%

 

Prev Next

Manager: Boston Partners MV

Manager Effective Fee: 0.70%

Asset Class: Equity Managers

Assignment: Mid Value

Market Value: $24,556,046

% of Total Fund: 9.2%

Note: Boston Partners-MV: 0.70% on first $25m/0.60% on remainder.

Prev Next

Manager: Brandes

Manager Effective Fee: 0.74%

Asset Class: Equity Managers

Assignment: Foreign Equity

Market Value: $39,824,387

% of Total Fund: 14.9%

Note: Brandes Partners: 0.95% on first $10m/0.80% on next $10m/0.60% on next $30m/0.50% on remainder.

Prev Next

Manager: Boston Partners SV

Manager Effective Fee: 0.99%

Asset Class: Equity Managers

Assignment: Small Value

Market Value: $25,886,408

% of Total Fund: 9.7%

Note: Boston Partners-SV: 1% on first $25m/0.80% on remainder.

Prev Next

Manager: Point Judith II

Manager Effective Fee: 1.50%

Asset Class: Private Equity

Assignment: Private Equity

Market Value: $1,174,791

% of Total Fund: 0.4%

Note: Management fee is charged on committed capital and is equal to 2.5% during the first six years of the fund; 1.5% for the next two years and 1.0% thereafter. Point Judith also charges a performance fee of 20%.

Prev Next

Manager: Graham Global II*

Manager Effective Fee: 3.0%

Asset Class: Hedge Funds

Assignment: Global Macro

Market Value: $5,426,857

% of Total Fund: 2.0%

Note: Additional performance fee of 25%

 

 

 

 
 

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