On Thursday, February 4, 2021, 10:13:12 AM EST, Laurie Frederiksen <laurie@bivio.biz> wrote:
It looks like ARKG does a pretty good job of laying out the risks involved in investing in their fund in their Summary Prospectus which you can see here:
Note that if your club uses Schwab as a broker, it will be complicated to do any end of year dividend adjustments which funds like this will require.
Schwab doesn't break down dividend adjustments by dividend pay date on their 1099's. Since you need that information to adjust your club records correctly, you then have an extra step to do to find the per dividend breakdown on the investment website. Then you need to make manual calculations to determine the proper adjustments to each dividend you received so you can fix them before you file your taxes.
Laurie Frederiksen Invest with your friends! www.bivio.com
We are also looking at some of the genetic engineering stocks (eg BEAM and CRSP) as well as ARKG. We have a couple of concerns. Many of these stocks and ARKG experienced a big jump in October as a result of the Nobel Prize award in this area (wish we had invested in September). I also saw some commentary that ARKG may be subject to a higher level of liquidity risk due the big run up in these stocks and the strong demand for this ETF. (ie the
They invest in small capital companies so as demand for the ETF goes up they find themselves owning significant positions in these stocks (in some cases 10% or more).
-Sometimes they have distributions which are not taxable dividends but return of capital. If the Brokerage does not catch that, you will pay tax on the dividend that is not really taxable. It pays to keep up with the ETF separately from the brokerage and Bivo.
-This year we had capital gains distributions from an ETF.
None of these are overwhelming. A little more work perhaps, but interesting (no, I am quite sane thank you).
Of the reasons we invested in one ETF, for instance, was because it was impossible to get into small cap companies in the genetics field. Many of them are not well followed by analysts, and certainly not by Value Line and only maybe by Morningstar. So we punted and got into an ETF.
ETFs actually are pretty interesting if you get into comparing them. There is a whole other set of metrics for comparing them.
Our club bought an ETF (QQQ) for the first time last July, just as a place holder for some cash that we weren't ready to invest at the time. We expected it to out perform cash - which it certainly did.
There was quite a bit of discussion on this list around Nov 6, 2020 that you might want to read.
Here are some issues as I see it:
1. They can cause more work for the Treasurer at tax time - check with bivio support on individual ones. We didn't know that when we bought it.
2. Buying an ETF kind of defeats the purpose of an investment club which is to learn how to evaluate individual stocks.
3. It's hard to evaluate/control your portfolio diversification when you're not in charge of the content.
Our Club (MakeALot) is very much interested in investing in ETFs. I understand they trade like a stock and was wondering what you thought about them. We don't want to incur any extra work for our Treasurer at tax time. I know you have referred
to them from time to time so we would appreciate your feedback.
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On Thursday, February 4, 2021, 10:13:12 AM EST, Laurie Frederiksen <laurie@bivio.biz> wrote:
It looks like ARKG does a pretty good job of laying out the risks involved in investing in their fund in their Summary Prospectus which you can see here:
Note that if your club uses Schwab as a broker, it will be complicated to do any end of year dividend adjustments which funds like this will require.
Schwab doesn't break down dividend adjustments by dividend pay date on their 1099's. Since you need that information to adjust your club records correctly, you then have an extra step to do to find the per dividend breakdown on the investment website. Then you need to make manual calculations to determine the proper adjustments to each dividend you received so you can fix them before you file your taxes.
Laurie Frederiksen Invest with your friends! www.bivio.com
We are also looking at some of the genetic engineering stocks (eg BEAM and CRSP) as well as ARKG. We have a couple of concerns. Many of these stocks and ARKG experienced a big jump in October as a result of the Nobel Prize award in this area (wish we had invested in September). I also saw some commentary that ARKG may be subject to a higher level of liquidity risk due the big run up in these stocks and the strong demand for this ETF. (ie the
They invest in small capital companies so as demand for the ETF goes up they find themselves owning significant positions in these stocks (in some cases 10% or more).
-Sometimes they have distributions which are not taxable dividends but return of capital. If the Brokerage does not catch that, you will pay tax on the dividend that is not really taxable. It pays to keep up with the ETF separately from the brokerage and Bivo.
-This year we had capital gains distributions from an ETF.
None of these are overwhelming. A little more work perhaps, but interesting (no, I am quite sane thank you).
Of the reasons we invested in one ETF, for instance, was because it was impossible to get into small cap companies in the genetics field. Many of them are not well followed by analysts, and certainly not by Value Line and only maybe by Morningstar. So we punted and got into an ETF.
ETFs actually are pretty interesting if you get into comparing them. There is a whole other set of metrics for comparing them.
Our club bought an ETF (QQQ) for the first time last July, just as a place holder for some cash that we weren't ready to invest at the time. We expected it to out perform cash - which it certainly did.
There was quite a bit of discussion on this list around Nov 6, 2020 that you might want to read.
Here are some issues as I see it:
1. They can cause more work for the Treasurer at tax time - check with bivio support on individual ones. We didn't know that when we bought it.
2. Buying an ETF kind of defeats the purpose of an investment club which is to learn how to evaluate individual stocks.
3. It's hard to evaluate/control your portfolio diversification when you're not in charge of the content.
Our Club (MakeALot) is very much interested in investing in ETFs. I understand they trade like a stock and was wondering what you thought about them. We don't want to incur any extra work for our Treasurer at tax time. I know you have referred
to them from time to time so we would appreciate your feedback.
NOTICE: The information contained in this message is proprietary and/or confidential and may be privileged. If you are not the intended recipient of this communication, you are hereby notified to: (i) delete the message and all copies; (ii) do not disclose,
distribute or use the message in any manner; and (iii) notify the sender immediately.
-------------------------------------------------------------------------
This message was secured by Zix(R).