Morgan Stanley voting to get rid of its Total Market Index fund???

[redgtxdi]

I have this Architect Portfolio thru Morgan Stanley 'cuz it's thru work & I don't really have a choice.

I noticed they've been sending me these "proxy vote" things to dump their Total Stock Market Index Fund. Now, it may not be as big in non-tax vs. taxable accounts but I just can't imagine why they'd be dumping the latest-greatest version of the all-encompassing fund. (duplicated by just about everyone else)

???

 

[sandmanwake]

So they can sell you funds that have higher fees, so they can make more profit?

 

[Christobevii3]

Maybe because etf's can do what it does for cheaper, or maybe people pulled out a ton in the last 6 months causing too much turn over and stiffling the gains.

 

[JS80]

Originally posted by: Christobevii3
Maybe because etf's can do what it does for cheaper, or maybe people pulled out a ton in the last 6 months causing too much turn over and stiffling the gains.

this guy has it right, TOO MUCH TURNOVER.

 

[Special K]

Originally posted by: JS80

Originally posted by: Christobevii3
Maybe because etf's can do what it does for cheaper, or maybe people pulled out a ton in the last 6 months causing too much turn over and stiffling the gains.

this guy has it right, TOO MUCH TURNOVER.

Wait - turnover refers to how often a security is sold, right? How can an index fund have high turnover? It just holds whatever is in the index it is tracking. There is no fund manager making buy and sell decisions.

Also, if high turnover was the reason, then wouldn't all mutual funds be experiencing this effect, seeing as the markets have been down in general lately?

 

[JJChicken]

Originally posted by: Special K

Originally posted by: JS80

Originally posted by: Christobevii3
Maybe because etf's can do what it does for cheaper, or maybe people pulled out a ton in the last 6 months causing too much turn over and stiffling the gains.

this guy has it right, TOO MUCH TURNOVER.

Wait - turnover refers to how often a security is sold, right? How can an index fund have high turnover? It just holds whatever is in the index it is tracking. There is no fund manager making buy and sell decisions.

Also, if high turnover was the reason, then wouldn't all mutual funds be experiencing this effect, seeing as the markets have been down in general lately?

An index fund would have to continuously buy and sell securities in order to hold them according to their market capitilisation weights. For example, say MS at $100 was 10% of the market, the fund would hold 10%. If the market rose and now MS was only 5% of the market, then the fund would have to sell some of its MS. I think it works that way.

 

[Special K]

Originally posted by: Barack Obama

Originally posted by: Special K

Originally posted by: JS80

Originally posted by: Christobevii3
Maybe because etf's can do what it does for cheaper, or maybe people pulled out a ton in the last 6 months causing too much turn over and stiffling the gains.

this guy has it right, TOO MUCH TURNOVER.

Wait - turnover refers to how often a security is sold, right? How can an index fund have high turnover? It just holds whatever is in the index it is tracking. There is no fund manager making buy and sell decisions.

Also, if high turnover was the reason, then wouldn't all mutual funds be experiencing this effect, seeing as the markets have been down in general lately?

An index fund would have to continuously buy and sell securities in order to hold them according to their market capitilisation weights. For example, say MS at $100 was 10% of the market, the fund would hold 10%. If the market rose and now MS was only 5% of the market, then the fund would have to sell some of its MS. I think it works that way.

Yeah, but look at VTSMX, it is a total market index, and its turnover rate is only 4%, which is much lower than the average actively-managed fund:

link

There must be something else going on here.

 

[Capt Caveman]

One would have to read the Proxy Vote information. It's possible they are just closing the fund and opening a new fund with the money or possibly merging it into another.