RSIVX explanation of fees

mikes425

Hi, I have not yet followed up with details of my bond sleeve for some reviews here on a different thread but meantime am very intrigued by RSIVX - as what seems a worthwhile candidate to consider as a substitution for a long-held position in Vanguard Intermediate VFIDX - at least am considering reducing some portion of my roughly 10% of total PF in VFIDX - which from my reading of things, does not appear headed for greatness in the forseeable future and possibly vulnerable to NAV losses in the wake of higher interest rates. I am leaning toward a more tactical approach with bond funds/ETFs in general. I've reviewed OSTIX but i am leaning more toward RSIVX just based on liking what i've seen with the firm's other funds... and given some favorable reviews here as well. Question does arise - the expense/management fee, appears, at least - to be on the high side ... relative to most of my other funds (such as Vanguard) - and i'm wondering if i'm misunderstanding something about that - is it in fact a 1.25% annual fee - or is there some sort of waiver on that ? Any clarification appreciated.

I would be inclined to pare back on my VFIDX by roughly half with proceeds into this fund, but if the expense fee is excessive, it is a factor i have to consider - especially in the realm of bond vs equity funds.

Thanks!

Mike

msf

The 1.25% ER includes a waiver of 0.40%, per prospectus. That is, absent the waiver, the ER would be 1.65%. While this should drop somewhat as the fund increases its AUM (assets under management), it will never be an inexpensive fund. Its strategies are research/labor intensive to execute, and the 0.65% management fee component of the ER reflects this.

In addition, the retail class shares include a (virtual) 0.25% 12b-1 fee. The fund doesn't call it that, because it's not required to (the fee is buried in the "other" expenses). But it's a shareholder servicing fee nonetheless. Quoting the SEC on this matter:

Some 12b-1 plans also authorize and include "shareholder service fees," which are fees paid to persons to respond to investor inquiries and provide investors with information about their investments. A fund may pay shareholder service fees without adopting a 12b-1 plan. If shareholder service fees are part of a fund’s 12b-1 plan, these fees will be included in this category of the fee table. If shareholder service fees are paid outside a 12b-1 plan, then they will be included in the "Other expenses" category.... FINRA imposes an annual .25% cap on shareholder service fees (regardless of whether these fees are authorized as part of a 12b-1 plan).