How YH&C is Different

Y H & C  Commercial Banks

Banks like Bank of American, Washington Mutual, Wells Fargo, Citibank, JP Morgan Chase, and others all have investment branches which offer clients the alternative of investing through their investment divisions which can be a mutual fund arm, private banking, private equity group, or a hedge fund division. Most of the time, clients are referred to an individual that is called a financial advisor who then places the client in funds that are managed by mutual fund managers within the bank. The financial advisor usually gets a commission for placing the client in those bank mutual funds. This is clearly a conflict of interest because the client is placed in funds that may not be the best funds for the client or might not be the best performing fund in an area the client is interested in. Y H & C is different in that I have no financial interest to buy specific mutual funds which I get a commission for.

Y H & C  Financial Planning Companies

Many financial service companies offer financial planning and are focused on strategic asset allocation and projecting necessary financial returns based on retirement objectives. There are many financial planners who do an excellent job of preparing asset allocation and returns needed to meet various objectives. However, the difference between Y H & C and financial planners is in the process used to select individual issues in equities and other equity related assets. Many financial planners use ETF and index funds to avoid specific security risk and ensure diversification. Many investors find this an excellent way of managing risk and gaining exposure to various equity markets. Y H & C looks to find equities that outperform indexes and benchmarks and concentrates assets in these securities.

 Y H & C  Mutual Funds

Mutual funds are funds that are pooled together where the manager of the funds selects equities, fixed income instruments, and may use leverage, futures, forwards, swaps, and possibly options to increase the value of the fund. Mutual funds typically specialize in one or two segments of the capital markets. For example a fund may use the capital that is pooled to buy equities of companies that are considered mid-capitalization (Mid-Cap). Sometimes, a fund specializes in a market value and segment, like a health care small cap fund or a large cap growth fund. There are many different kinds of funds and a whole group of mutual funds typically are managed by a fund family, like a Vanguard or T. Rowe Price.

The difference between Y H & C and a mutual fund company is with a mutual fund family, a client will not have access to a fund manager and the decisions the fund manager makes in selecting equities, fixed income instruments, or any other product the manager may utilize to increase the value of the fund. Y H & C works with investors to customize the investment plan and instruments that are used to achieve client goals. In addition, mutual funds also typically charge loads, or fixed commissions on the capital that is invested, either initially or when the fund is sold. Mutual funds also charge a management fee. With Y H & C, there is a management fee as well, however the costs are moderate when compared to most mutual funds, especially loaded mutual funds.

 Y H & C  Hedge Funds

A hedge fund is a vague term used to describe many different ways a manager of funds can invest capital. There are many varieties of hedge fund styles- for example, long only, short only, equity market neutral, long short, 80-20 long short, 120-20 long short, convertible arbitrage, merger arbitrage, managed futures, etc. Investors usually invest in specific hedge funds for specific reasons, like exposure to a specific manager, or risks that the investor feels comfortable with. Hedge funds typically like to employ leverage, or borrowing, to enhance their returns. With the increased leverage comes increased risk if asset selection is not successful. Hedge funds usually have higher costs for investors, with the typical hedge fund charging 2-20, or a 2% management fee and 20% of profits (or 20% of profits above some threshold).The two and twenty fees are much higher than what Y H & C charges for management fees. In addition, hedge funds typically have a lockup period which commits an investor to keeping their initial capital at the hedge fund for a minimum period of time, typically anywhere from 1 year to three years. Y H & C has no such lockup period.