Frequently Asked Questions and Definitions
What is Active Management?
Active management is an investment strategy which seeks to capitalize on market fluctuation by making calculated trading decisions on a daily basis.
What is Passive Management?
Passive management, also known as buy and hold, often establishes an asset allocation to be held over the long term (10-20 years) in expectation that the market will go up over time.
What is a Relative Return Strategy?
The return that an asset achieves over a period of time compared to a benchmark. The relative return is the difference between the absolute return achieved by the asset and the return achieved by the benchmark.
What is an Absolute Return Strategy?
Absolute return strategies are designed to generate positive returns regardless of market direction. These strategies may limit market risk and protect against capital loss.
How are these strategies implemented?
The Purcell strategies utilize mutual funds which have no transaction charges or redemption fees. These advisor friendly mutual funds permit active trading.
What is an Index fund?
An Index fund is a mutual fund designed to match or track the components of a market index, such as the Standard & Poor’s 500 Index (S&P 500).
What is an Inverse fund?
Inverse funds have the objective to move opposite the movement of an index on a daily basis. For example, an inverse S&P 500 index fund is designed to decrease when the S&P 500 index is increasing. Conversely, if the S&P 500 index is decreasing, the inverse S&P 500 fund should increase. Inverse funds are also known as short funds or bear funds.
What are Leveraged Index funds?
Leveraged index mutual funds amplify the performance of a given index by a specified amount. For example, if the S&P 500 gains 2% on a particular day, an S&P 500 2x index fund should increase by 4%.
What is your minimum investment amount?
Minimum initial investment amounts are $50,000 when the account is held at Rydex Funds or Trust Company of America and $25,000 when held within a variable annuity.
Where are my assets held?
Assets are held directly at the custodian; the mutual fund company, variable annuity company or Trust Company of America.
Can I add to or withdraw money from my account?
Yes. Checks need to be made payable to the custodian, mutual fund company, Trust Company of America or the variable annuity company where your account is held, and mailed to Purcell so we can make sure your money is invested in a timely and accurate manner. While no custodian allows for checkwriting capability, withdrawals may be made at any time. Please contact your advisor to initiate a withdrawal or liquidation as there may be tax implications and penalties.
What does it cost to have Purcell manage my account?
Management fees range from 2.5% to 2.9% annually depending on the investment program and assets managed. Fees are billed quarterly in advance and are automatically withdrawn from the account unless otherwise specified.
The investment management fee is separate and distinct from the internal fees and expenses charged by mutual funds to their shareholders. These fees and expenses are described in each fund’s prospectus, and will generally include a management fee, internal investment, custodial, and other expenses, and a possible distribution fee. Prospective clients should consider all of these fees and charges when deciding whether to invest in the program.
What are the tax implications of active management?
Performance results for the programs do not reflect the impact of taxes. Program accounts may engage in a significant amount of trading. Gains or losses will generally be short-term in nature; consequently, Purcell programs will likely not be suitable for clients seeking tax efficiency. However, tax-deferred retirement accounts such as annuities and qualified accounts may be used with these programs when tax exposure is a concern. Please consult with an accountant regarding tax implications.
Can I view my account online?
Yes. All custodians and variable annuity companies allow clients access to their accounts online. You may access statements, tax documents and transactions at any time, day or night. Click here for a link to your custodian.
Will I receive account statements?
Yes. You will receive statements directly from the custodian or variable annuity company on a quarterly basis and a consolidated quarterly performance evaluation from Purcell.
How do I get started investing?
Please contact your financial advisor for assistance. Working with a financial advisor does not increase the management fees.