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Post by chang on Dec 31, 2023 18:28:02 GMT
Does anyone know of a brokerage where you can buy Baron I-class funds at reduced minimums? It seems to be a strict $1M at Fidelity and Vanguard.
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Post by chang on Dec 31, 2023 18:54:38 GMT
Of course, if one wants $100,000 of, say, BFGIX, one can easily buy $1M on margin and then sell $900,000 the next day. That will trigger a margin interest payment of 9.25% x $1M / 360 = $257.
BFGIX and the investor class BFGFX have expense ratios of 1.06% and 1.32%, so the cost savings of the I-class is 0.26% x $100,000 = $260 per year. Almost an exact wash!
Hence, the “return period” to recoup the margin fee is one year.
Of course, what really matters here is whether the NAV goes up or down on the day after you buy $1M (= on the day you sell $900,000). If the NAV goes up 1%, you just made a quick $10,000. If the NAV goes down 1%, you just lost a quick $10,000. Whatever happens will dwarf the interest payment / difference in ER.
This would be a risky thing to do!
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Post by yogibearbull on Dec 31, 2023 19:23:40 GMT
Which? Some Baron funds are available NTF/no-load at Fido and Schwab: BFGFX, ER 1.32%, min $2,500/$100 (vs BFGIX, ER 1.06%, min $1 million). Probably not worth playing with large margin for 26 bps benefit. There may also be short-term fund trading restrictions.
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Post by chang on Dec 31, 2023 19:30:25 GMT
BFGIX. It's a TF fund so there wouldn't be any ST trading restrictions.
As I say, buying on margin and then selling off the unwanted amount is a gamble.
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