Latest news with #Gholston
Yahoo
4 days ago
- Business
- Yahoo
Study tallies interval fund fees that 'gobble up' returns
Within the sales pitch for interval funds that open access to alternative assets like private credit, there are "fees that are easy to miss and hard to understand," according to Morningstar. The expense structure for interval funds — the name refers to the set periods when issuers offer to repurchase a percentage of the assets — can "encourage interval fund managers to take additional risks that disproportionately benefit them rather than investors," research firm Morningstar found in a report last month. Fees tied to leverage margins and so-called "hurdles" based on the level of yield may, in certain cases, ratchet up the cost of interval funds to an adjusted, all-inclusive ratio of 3.39% shaved off the top of a 10% gain. Issuers are marketing the products to financial advisors and their clients as a means of tapping into the private credit boom or getting exposure to other alternative investments. The study shows the possibility for "scenarios in which more than investors will realize will be gobbled up by fees," said Alec Lucas, a co-author of the report who is the director of manager research in the active funds research unit of Morningstar. That is not to say "that all of them are bad options or can't play a useful role in a portfolio," but the results should serve as a reminder to advisors and clients "to exercise some caution in what they're getting for what they pay," he added. High potential yields from private credit instruments that aren't always available to the mass market are drawing some investors to interval funds, according to Will Gholston, a chartered financial analyst and certified financial planner who is the vice president of investments with New York-based registered investment advisory firm Re-Envision Wealth. However, their high costs are "definitely a significant detractor from the appeal of that structure," requiring careful due diligence of marketing efforts portraying interval funds as offering "attractive yields without outsize risk," Gholston said. Those drawbacks and the lower liquidity than ETFs or other open-end funds explain why he has rarely recommended them to clients. "More and more you're starting to see various strategies being offered in more of an ETF wrapper, and private credit is getting there," Gholston said. "You definitely have to analyze the full landscape of potential investments to make sure you can't get that exposure for cheaper." READ MORE: Mindful of risks, RIAs steer clients into private markets Interval funds represent "only a small percentage of pooled investment vehicle assets," but their assets have grown at an annualized rate of 39% over the past decade to $80.76 billion, according to a primer on the products released by Morningstar last year. At the time, the five biggest interval fund issuers — Cliffwater, ACAP, Bluerock Capital Markets, Apollo Global Management and Versus Capital — managed about 60% of the assets held in the products. But the entrance this year of a series of collaborative interval funds launched by KKR and American Funds sponsor Capital Group could alter that composition. Taxable bonds including private credit represented the most prevalent type of investment in the category at 57 interval funds and $45.6 billion in assets under management. As for the fees on interval funds, their adjusted expense ratio, according to Morningstar's analysis of the products' prospectuses, is 2.49%, compared to 0.58% for ETFs and 0.99% for mutual funds. But the costs could run even higher, based on the expenses the fund companies collect on the total assets and the particular hurdles of profits, Morningstar concluded last month. That's how the margin loans that add a layer of leverage to the investments tack onto the cost of the vehicles. For example, one of the products collects a base management fee of 1.375%. But if the yield goes above 7%, the hurdle or "incentive" fees kick in. The issuer collects a "catch-up" fee amounting to 100% of the net income on the investment between 7% and 8.235% and another hit of 15% of the profit above 8.235%. Then there are the 7.5% interest payments for the margin loan and another 0.80% of other expenses such as legal, accounting, custodian and transfer agent costs. In all, a $500 million portfolio with another $200 million in leverage invested in a product that generated an impressive yield of 10% would come with costs amounting to more than $33.2 million, according to Morningstar. Even excluding the interest charge, the net yield would drop to 7.36%. And there are several high-yield bond ETFs that get 7% yield at a cost of less than 0.10%, the study said. "There may be some best-in-class asset managers that have access to cheaper leverage and are able to offer higher expected returns or unique return patterns," Lucas and co-author Brian Moriarty wrote. "But the math becomes much harder to work out in favor of fundholders, and there is limited evidence of manager skill over long periods. It seems more likely that asset managers with lofty fee structures tied to leverage will be prone to borrow capital regardless of their ability to earn excess returns with that capital. It seems easier for investors to just opt for cheaper options." READ MORE: As SEC leans toward opening up alts access, advisors ring alarm bells The Securities and Exchange Commission and FINRA similarly warn advisors and investors about the high fees of interval funds. For advisors, examining the costs of an investment is "something that they'd want to do in any case, but that's especially the case here," Lucas said. And, when they read the prospectus of an interval fund, they should also keep in mind that many of the funds list the fees as a quarterly figure, he noted. So they may need to multiply them by four to get the actual annual figure. "It's possible to use that structure and still be shareholder-friendly because you're playing the long game," Lucas said. Still, he continued, "Managers could be tempted to take more risks than they should. We wanted to get that piece out, because these things are being marketed right now." Sign in to access your portfolio
Yahoo
16-05-2025
- Yahoo
Community remembers fallen officers, honors them with memorial
May 16—At the Morgan County Fallen Officers Memorial Service, Judge Takisha Gholston posed the question: How do we honor the police who have died while serving the people of Morgan County? Area law enforcement, family members of the deceased and residents gathered Thursday morning in Cotaco Park, located behind the Morgan County Courthouse, to commemorate the 10 officers who have died while on duty in Morgan County. Their deaths occurred between 1905 and 1985. "We honor them by living a life of service worthy of their sacrifice," said Gholston, Decatur's Municipal Court judge. Morgan County Sheriff Ron Puckett opened the memorial. He said law enforcement members act as public servants who love their community so much that they're willing to risk their lives every day. The service included the posting of the colors and a 21-gun salute. Two local high school students sang the National Anthem and "Amazing Grace." Jerry Baker, pastor of St. Peter Missionary Baptist Church, delivered an invocation. He referenced a passage in the Bible in which Jesus says that the greatest love is to lay down your life for your friends. An officer has not died on duty in Morgan County in 40 years, but Puckett said the job poses a risk every day. "Unfortunately, the world we live in, it could happen today; however, the really good news for us is that we live in a community that not only supports law enforcement, but they honor them," Puckett said. In the keynote address, Gholston said police demonstrate four qualities each day, which Decatur residents should also strive to uphold: humility, compassion, honor and integrity. Following a county and city proclamation, Alan McDearmond, chief of Hartselle Police Department, read the roll call of fallen officers. With each name, an agent came forward to the memorial monument and presented a rose for the deceased. "It's very humbling to be asked to do it and obviously very humbling to read the names, as well," McDearmond said. "William Biles actually was killed near Brewer (High School) a couple years before I started there." McDearmond said the loss of Morgan County Deputy Charles "Bill" Biles was at the forefront of his mind when he began to serve the same community. Biles died in 1985, and McDearmond believes that he may have stopped a school shooting with his sacrifice. The memorial offers a chance for area law enforcement to bond, McDearmond said. "It brings all the officers together, and I think that it strengthens our relationships amongst each other," he said, "to assist each other and do the best we can for all the citizens of Morgan County." Morgan County Commission Chairman Ray Long has participated in the Fallen Officers Memorial for 15 years. He expressed his respect for both the deceased and current law enforcement. "I always say it's not a job; it's a calling," Long said. "You have to be called to be in law enforcement because it's such a sacrifice that you make for yourselves and your families." Thursday's service was part of National Police Week, which started in 1962, when President John F. Kennedy signed a proclamation. In 2024, 147 officers nationwide died while in the line of duty, according to the National Law Enforcement Officers Memorial Fund. In the city proclamation, Decatur Mayor Tab Bowling noted that every 58 hours, a law enforcement agent dies while on duty. "It's so important that we remember the fallen officers and we give thanks that we haven't seen that in the county since 1985," Bowling said. — or 256-340-2437
Yahoo
12-03-2025
- Yahoo
Tennessee man accused of killing wife's teen lover in bed
A 41-year-old Tennessee man faces a murder charge for allegedly killing his wife's 18-year-old lover, according to police. Police alleged Jonathan Belk, of Dunlap, 175 kilometres southeast of Nashville, stabbed Billy Jean Floyd to death after returning home early Saturday morning and finding him in bed with his 31-year-old wife. Police said his wife, Jada Gholston, also suffered injuries in the attack. According to a police report obtained by ABC affiliate WTVC in Chattanooga, officers were informed at about 7 a.m. on Saturday that Gholston was at a local hospital's emergency room being treated for stab wounds. Gholston told police that 'an unidentified male jumped on her boyfriend while they were in bed, and that he just kept stabbing him.' She also told investigators that she was unaware if her boyfriend was alive. When officers arrived at the scene, they found Belk 'standing in his doorway covered in blood.' He told police that he was Gholston's husband. The Chattanoogan reports Belk had non-life threatening wounds. Cops also located Floyd's body stuffed into a trash can in the fetal position. Officers asked Belk if he was worried about other issues apart from criminal charges. 'I am worried about my relationship with my wife due to the fact that I offed him,' Belk allegedly said, according to the police report. An online obituary says Floyd — nicknamed Lil Bill — had just celebrated his 18th birthday three days before his death. 'He enjoyed hunting, fishing, four wheelers and working on everything,' the obit reads. 'He mostly enjoyed spending time with his family and friends.' Belk is being held at the Sequatchie County Jail. He is facing several charges, including criminal homicide. 'Ghost Adventures' star's wife accused of murder-for-hire plot SORE LOSER: Convicted killer Scott Peterson gets ruffed up in jail while playing pickleball
