AMCPX Amcap Fund

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Jobseeker2013
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AMCPX Amcap Fund

Post by Jobseeker2013 »

We have this fund as a gift from relatives who use an advisor. Is it worth keeping since they are the ones that paid the upfront 5.75% commission? It has underperformed the SP500 and total stock market funds. Part of the reason might be there is a small international portion. Also, I see that it can be tax inefficient as its in the advisor brokerage account under my wife's name. As far as I can tell I dont see any advisor fees other than the .65 expense ratio on the statement. I just dont want to hurt the relatives feelings as it was free money to us essentially. Cant really complain.
exodusNH
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Re: AMCPX Amcap Fund

Post by exodusNH »

Jobseeker2013 wrote: Fri Aug 19, 2022 9:01 am We have this fund as a gift from relatives who use an advisor. Is it worth keeping since they are the ones that paid the upfront 5.75% commission? It has underperformed the SP500 and total stock market funds. Part of the reason might be there is a small international portion. Also, I see that it can be tax inefficient as its in the advisor brokerage account under my wife's name. As far as I can tell I dont see any advisor fees other than the .65 expense ratio on the statement. I just dont want to hurt the relatives feelings as it was free money to us essentially. Cant really complain.
What would you incur in taxes if you sold out of it?
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retired@50
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Re: AMCPX Amcap Fund

Post by retired@50 »

It's got a few strikes against it...
1. High expense ratio
2. Large cap growth focus
3. Recurring capital gains distributions

I'd thank the relative profusely, but simply try to explain that using a total market fund for US or International stocks, with a low expense ratio, is a better fit with your investment objectives. Paying taxes could be a concern, depending on the size of the gift, but you'll be paying in other ways if you don't sell it.

Regards,
If liberty means anything at all it means the right to tell people what they do not want to hear. -George Orwell
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Jobseeker2013
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Re: AMCPX Amcap Fund

Post by Jobseeker2013 »

What would you incur in taxes if you sold out of it?

i believe a long term capital gain. It has gained 8k since we got it. It was up 21k at some point. We got it for 32k went up to 51k and now around 40k.
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retired@50
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Re: AMCPX Amcap Fund

Post by retired@50 »

Jobseeker2013 wrote: Fri Aug 19, 2022 9:49 am What would you incur in taxes if you sold out of it?

i believe a long term capital gain. It has gained 8k since we got it. It was up 21k at some point. We got it for 32k went up to 51k and now around 40k.
Was this "gift" from a person who is still alive, or was it an inheritance?

Your cost basis in the gifted shares could be much different depending on the circumstances.

Regards,
If liberty means anything at all it means the right to tell people what they do not want to hear. -George Orwell
Topic Author
Jobseeker2013
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Re: AMCPX Amcap Fund

Post by Jobseeker2013 »

retired@50 wrote: Fri Aug 19, 2022 9:52 am
Jobseeker2013 wrote: Fri Aug 19, 2022 9:49 am What would you incur in taxes if you sold out of it?

i believe a long term capital gain. It has gained 8k since we got it. It was up 21k at some point. We got it for 32k went up to 51k and now around 40k.
Was this "gift" from a person who is still alive, or was it an inheritance?

Your cost basis in the gifted shares could be much different depending on the circumstances.

Regards,


Still alive
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retired@50
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Re: AMCPX Amcap Fund

Post by retired@50 »

Jobseeker2013 wrote: Fri Aug 19, 2022 9:58 am
retired@50 wrote: Fri Aug 19, 2022 9:52 am
Jobseeker2013 wrote: Fri Aug 19, 2022 9:49 am What would you incur in taxes if you sold out of it?

i believe a long term capital gain. It has gained 8k since we got it. It was up 21k at some point. We got it for 32k went up to 51k and now around 40k.
Was this "gift" from a person who is still alive, or was it an inheritance?

Your cost basis in the gifted shares could be much different depending on the circumstances.

Regards,


Still alive
In that case, your basis is the same as their basis before they gave you the shares. In other words, you inherited the giver's basis. So, it really doesn't have anything to do with the value of the shares on the date of transfer, it has to do with what the giver paid for the shares that were transferred. Has this been discussed and does your current custodian have the correct basis for your shares?

Regards,
If liberty means anything at all it means the right to tell people what they do not want to hear. -George Orwell
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Re: AMCPX Amcap Fund

Post by pkcrafter »

Jobseeker2013 wrote: Fri Aug 19, 2022 9:01 am We have this fund as a gift from relatives who use an advisor. Is it worth keeping since they are the ones that paid the upfront 5.75% commission? It has underperformed the SP500 and total stock market funds. Part of the reason might be there is a small international portion. Also, I see that it can be tax inefficient as its in the advisor brokerage account under my wife's name. As far as I can tell I dont see any advisor fees other than the .65 expense ratio on the statement. I just dont want to hurt the relatives feelings as it was free money to us essentially. Cant really complain.
This is an unfortunate situation mostly because your relatives are using an advisor, whom they are paying, and he's recommending expensive funds. Since you did not pay for the fund, you could keep it, but the ER is high, and it certainly wouldn't be recommended on Bogleheads. It's also best held in a tax-advantaged account. The biggest problem here is your relatives need some guidance on how to invest.




Paul
When times are good, investors tend to forget about risk and focus on opportunity. When times are bad, investors tend to forget about opportunity and focus on risk.
exodusNH
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Re: AMCPX Amcap Fund

Post by exodusNH »

Jobseeker2013 wrote: Fri Aug 19, 2022 9:49 am What would you incur in taxes if you sold out of it?

i believe a long term capital gain. It has gained 8k since we got it. It was up 21k at some point. We got it for 32k went up to 51k and now around 40k.
If that's the case, you're only looking at $1,200 in taxes.

I'd sell it and buy what you want. If this is still held at the original advisor's account, you can initiate a transfer from Vanguard, Fidelity, or Schwab and sell it once the transfer completes.

You don't have to tell your relative anything. You glance over *what* you're holding and just let them know it's doing well.

If they specifically ask and you don't want to lie about still holding it, just say that after discussing it with your advisor/tax planner, you moved the funds to a more tax-efficient holding and that you've gained x% since the transfer, thank you so much for the generous gift.

I had a small set of holdings from American Funds that Northwestern Mutual put me in. I sold out of everything in Dec 2021. The funds are fine, but I believe most of their outperformance was in the early years of their funds. Now, as you noted, many of them are simply S&P 500 funds in an expensive and tax-inefficient wrapper.

I don't regret the decision. I uses the proceeds to buy the balance of my 2021 I Bonds, pay off a 0% credit card balance before it expired, the capital gains taxes, and the balance went into Vanguard index funds.

Zero regrets.
Topic Author
Jobseeker2013
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Re: AMCPX Amcap Fund

Post by Jobseeker2013 »

retired@50 wrote: Fri Aug 19, 2022 10:03 am
Jobseeker2013 wrote: Fri Aug 19, 2022 9:58 am
retired@50 wrote: Fri Aug 19, 2022 9:52 am
Jobseeker2013 wrote: Fri Aug 19, 2022 9:49 am What would you incur in taxes if you sold out of it?

i believe a long term capital gain. It has gained 8k since we got it. It was up 21k at some point. We got it for 32k went up to 51k and now around 40k.
Was this "gift" from a person who is still alive, or was it an inheritance?

Your cost basis in the gifted shares could be much different depending on the circumstances.

Regards,


Still alive
In that case, your basis is the same as their basis before they gave you the shares. In other words, you inherited the giver's basis. So, it really doesn't have anything to do with the value of the shares on the date of transfer, it has to do with what the giver paid for the shares that were transferred. Has this been discussed and does your current custodian have the correct basis for your shares?

Regards,
Ah good to know. Thanks. I would imagine the advisor would know.
exodusNH
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Re: AMCPX Amcap Fund

Post by exodusNH »

Jobseeker2013 wrote: Fri Aug 19, 2022 10:12 am
retired@50 wrote: Fri Aug 19, 2022 10:03 am
Jobseeker2013 wrote: Fri Aug 19, 2022 9:58 am
retired@50 wrote: Fri Aug 19, 2022 9:52 am
Jobseeker2013 wrote: Fri Aug 19, 2022 9:49 am What would you incur in taxes if you sold out of it?

i believe a long term capital gain. It has gained 8k since we got it. It was up 21k at some point. We got it for 32k went up to 51k and now around 40k.
Was this "gift" from a person who is still alive, or was it an inheritance?

Your cost basis in the gifted shares could be much different depending on the circumstances.

Regards,


Still alive
In that case, your basis is the same as their basis before they gave you the shares. In other words, you inherited the giver's basis. So, it really doesn't have anything to do with the value of the shares on the date of transfer, it has to do with what the giver paid for the shares that were transferred. Has this been discussed and does your current custodian have the correct basis for your shares?

Regards,
Ah good to know. Thanks. I would imagine the advisor would know.
Are you able to view the holdings online? If so, there should be a place to see the gains. You can back that out to figure out the basis.
hnd
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Re: AMCPX Amcap Fund

Post by hnd »

it could of been worse. I'd bring this gift into my own brokerage, sell, and fit it into my portfolio.

We were gifted whole life insurance policies a few years ago. it was purchased when I was 1. it was like 50 bucks a month my parents and grandparents had been funding. 35 years and it has like little cash value. I said thanks, cashed it out and deposited it in my brokerage.

we are talking about my parents, and quite frankly its never been brought up again (and my dad and i talk investments frequently), so I think you may be fearing something that may never come to fruition. And if its brought up, just say that money is doing fine. if they bring up whether it still resided in the AMCAP fund I'd say we did an evaluation of all assets and attempted to consilidate. The money is allocated differently but is still working in the market. If they are mad about that, not much you can do.
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Duckie
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Re: AMCPX Amcap Fund

Post by Duckie »

Jobseeker2013 wrote: Fri Aug 19, 2022 9:01 am We have this fund as a gift from relatives who use an advisor. Is it worth keeping since they are the ones that paid the upfront 5.75% commission? It has underperformed the SP500 and total stock market funds. Part of the reason might be there is a small international portion. Also, I see that it can be tax inefficient as its in the advisor brokerage account under my wife's name.
So your wife's relatives gave her shares in AMCPX and those shares are still at the original brokerage. She needs to:
  1. Make sure the fund has both the automatic dividend reinvestment and automatic distribution reinvestment options TURNED OFF. She does not need to buy any more of this fund. AMCPX is a decent fund and 0.65% is not a horrid expense ratio but she can do better.
    .
  2. Get her relatives' cost basis for the shares. The advisor should have this information which is required to figure her taxable gain/loss when selling. She needs it in official form if the IRS ever comes calling.
    .
  3. Transfer the AMCPX shares "in kind" to a different brokerage (after getting the cost basis) whether or not she plans to sell. That way neither the advisor nor her relatives would know if/when she does sell. There was an earlier thread where someone was gifted stock, sold it at the original brokerage, and removed the money. The "advisor" then complained to the givers about it causing some trouble. You don't need the hassle.
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