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Contributor
In addition to checking and savings accounts, I established Strategic Managed and Annuity Accounts on 3/13/2009, basically at the trough of the 2008 collapse. Since then the DJIA and SP500 have generally been on a meteoric rise. However, my records show that since account inception, the annuity interest rate has be increased slightly on two occasions (i.e., 1/1/12 and 1/1/13) while being significantly decremented on five occasions (i.e., 9/1/10, 10/1/11, 7/1/13, 7/1/14 and 1/1/15). With the latest decrement, I am losing almost $3 per day in interest compared to what I was earning three days ago ... or essentially a $1,100 per year loss. Moreover, the effective interest rate today is being advertised as 3.904% whereas it is actually 3.83%. In spite of DJIA and SP500 performance over the past year, the performance of the strategic managed fund has been essentially stagnant. In fact, the account is worth almost exactly $2,000 less today as compared to six months ago even though both the DJIA and SP500 are both about 1,000 points higher now. This appears to be more of a trend than a short-term phenomenon and I am not too pleased.

2 REPLIES

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A lot of mutual fund investors are mystified by the apparent non-performance of their funds during a bull market and some of the statements are, while not untruthful, can be misleading. A recent headline in the N.Y. Times read, "Who Routinely Trounces the Stock Market? Try 2 out of 2,862 funds. Here's the link or you can type the headline on the nytimes.com search field: http://www.nytimes.com/2014/07/20/your-money/who-routinely-trounces-the-stock-market-try-2-out-of-28... The culprit to "missing" profits are usually management fees and/or overseas taxes that eat into a fund's performance for the small investor. It would help to really dig into some research online about how funds arrive at their profits and losses. It will not be on the statement and may be buried in the prospectus. Google what info/education you may be missing about understanding funds fees. If interest rates come back to the point that the middle and upper middle class is no longer getting shafted (not likely this year or next) you may be better off with a simple CD from an institution paying the highest rate. Bankrate.com for that info. After all, a couple of thousand profit each year is better than a mysterious two thousand per year loss.
Then, again, you might have simply suffered a bad stock picker/fund manager which you paid handsomely to use. Time to tell him: "It's just not working out. Pack your bankers box and security will see you out".