Spreadsheet to analyze if your managed portfolio is beating the index?

[clubsoda]

Several years before I found out that early retirement was a thing, and low-fee index investing the preferred method of stock investing, I put my money with a portfolio manager who has me invested in an array of single stocks. He charges 1% of assets, billed quarterly. Once I have up to a certain threshold the fee goes down to 0.75% of assets under management.

He is a fiduciary, and I am confident that he is an ethical human being. He sells no packaged products of any kind. I consider myself lucky that back when I knew zero about this sh-t, I found him, and didn't wind up in some packaged garbage products. As a financial advisor, what he says is exactly like what JL Collins says, EXCEPT he thinks it is better if people invest in individual companies (focusing on dividend stocks) and if everyone invested in the index, it would be bad. He has some compelling arguments for this. Since finding the GCC blog, Mad Fientist, etc., I have started additional index investing on my own -- kind of like going to a Protestant church on Sunday and then Mass on Wednesday to hedge my bet. 

I have done pretty well with this portfolio, and know it will be fine if I just let it stay there....but could it be better without the drag of this 1% fee? Sure. Is the focus on dividend stocks enough to overcome this drag? Maybe, but then is it a wash? I am also concerned about capital gains consequences of deciding to move this portfolio all into the index at once. It would be a huge tax problem for me that I refuse to take on.

I have thought about investing in real estate once my locale's bubble goes pop, and harvesting some losses in the managed portfolio to come up with an appropriate down payment. That would be one way to reinvest the money and gradually get out of a managed portfolio. But, I have no idea when it will be feasible to get into real estate here, and I'm unwilling to buy any properties I can't drive to in an afternoon.

I wondering if anyone can point me to a spreadsheet or calculator where I can plug in the income (both growth and dividends) generated by my portfolio, the fees I paid, and compare it to VTSAX for a one- or two-year period. I feel like I need to know THIS number before I can think about pulling some cash out of the managed portfolio and putting that toward real estate. You never know, even in this market, the right deal might be out there. I want to compare apples to apples, and then apples to oranges. Thanks!

[prognastat]

I'm not familiar with any particular spreadsheets for this. I've never had assets under active management so I'm not familiar with all the ins and outs from that, but I would assume at minimum they provide some kind of annual statement with the returns and dividends received on your investments with them.

You would need to take the return % and subtracts their fee %. Vanguard provides the performance and fee information for each fund they have so you should be able to compare the two. You can either find it on their website or if you google search the particular index fund you want to compare to usually it is one of the first results. If the two are at all close I would switch to vanguard unless you feel like the management is helping you in some other way such as preventing you from selling in a panic when the market drops etc.

Even if your financial is a great advisor and ethical and has your best interest at heart the odds of him being able to consistently beat the market in the long run is abysmal and he is charging you a significantly higher fee than you would at Vanguard for increased risk. Also by focusing primarily on stocks that provide high dividends your portfolio is likely less diverse than if you were investing in a diverse index fund such as VTSAX which would increase your risk and dividend investing hasn't been proven to increase returns meaning you are taking on more risk for unproven benefit. From the sounds of it though your advisor could be far far worse, one actively trying to take advantage of you, however it sounds like you are taking on more fees, more risk and no increase in return based on historical data.

You would generally want to compare for at the very minimum a 5 year period when comparing investments, though depending on how long you have been with your advisor this may not be possible.

[clubsoda]

This is a good response, prognastat. I don't have 5 years of data. I have just over a year that's readily available. Looking at my personal capital account, the managed portfolio grew 3.81% since I started using personal capital. Fees were just under half of the amount of dividend income it generated. During the same period of time, VTSAX grew 11.77%. 

I need to get out, but I can't do it all at once -- tax problem.

I could just move the portfolio to something like e-trade without selling anything in it, and then gradually sell chunks of it to buy VTSAX at a pace that doesn't cause negative tax impacts. I have been intimidated by this process, however, so I haven't done anything.

[prognastat]

Yeah 3.81% growth over the past 12 months would be pretty bad returns compared to the market which grew about 12% over the last 12 months. Good news it is still more of a return than the money would have had in your bank account, keeping cash or of course spending it so that is good. However, I would definitely not be investing more with him starting immediately and also be looking at how to get the money transferred to something like Vanguard. I would give Vanguard a call to ask what would need to be done to get the funds transferred, they tend to be very helpful.