Did you know that Capital One 360 sells mutual funds? Dubbed the 360 Investment Account, I guess they are trying some cross-selling of their 360 Savings Account. I don’t own any of them, but a visitor asked about them, so I decided to take a look since I was interested myself. Reminder – I’m not a financial professional.
It seems like they run 9 no-load mutual funds, covering some but not all asset classes like Large Cap, Mid Cap, Small Cap, International, and Bonds. You can only buy them from Capital One 360. You can also buy a mix of the funds in 3 basket portfolios – Conservative, Moderate, or Aggressive. You must already have a savings account with them to open an investment account. I found the information from the website pretty sparse, so I delved into the prospectus and also gave them a call at 1-866-BUY-FUND. I was surprised by what I found:
Basics:
– You need to open with $1,000 for each individual fund ($250 for IRAs). After that, you can set up an Automatic Investment Plan for at least $25 a month.
– Minimum to buy one of the the 3 basket portfolios – $7,000 ($1,700 for IRAs)
– There is a $10 annual custodial fee if you open an IRA. Waived for balances above $30,000.
Pros:
– These are no-load funds, with no sales commissions. So you don’t have to pay a fee upfront to buy these funds.
Cons:
– At least to me, the fact that they are actively managed funds make them a con. What’s really annoying is that they call their Mid-Cap fund ‘Index Plus MidCap Fund’, which suggests it’s an index fund. But the prospectus states the fund’s objective as “to outperform the total return performance of the Standard & Poor?s MidCap 400 Index”. How’s this an index fund? The objective of just about every actively managed fund is to outperform an index. That’s the whole point! Very misleading to me, especially for their target audience of people looking for a simple investment.
– The expense ratios for the funds run from 0.93-1.75% with the current expense waivers. Otherwise they’d be higher. This is about industry average for actively managed funds, but much higher than the typical expense ratio for a good index fund. My entire retirement portfolio is at a .21% expense ratio.
– These are not “true” no-load funds. They charge 12b-1 fees of 0.25%. This is the absolute highest you can set the 12b-1 fee in order to still call it a “No-Load Fund”. Lame. 12b-1 fees are for distribution and marketing to brokers who traditionally sell these funds. Capital One 360 is the only way to buy these funds. There are no brokers! I don’t remember seeing any ads for these funds either. Very fishy.
Summary:
At first, when I saw the high expense ratios, I thought that it was the trade-off for being about to buy any amount of these cool little baskets I wanted. For example, I expected to be able to start with no minimum, and put in $50 one month, or $13 the next month, and build up a nice little mix of stocks and bonds. But the actual setup is pretty much like all other mutual funds. I don’t see any reason at all to go for these funds over similar products from places like Fidelity, Vanguard, or American Century. Your thoughts?
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Thanks for the post!! I have the balanced fund and the fees are as such
ING BALANCED FUND:
Management %.80
Distribution (12b-1) %.25
Other expenses %.27
Net expenses %1.25
No load, no redemption
I suppose it isn’t the greatest, but it’s not so bad. Someone at HSBC was trying to get me to do their Lifeline funds. those charge net expense of 1.50% with a 5% load and 2.0% redepmtion.
However, maybe ING direct wasn’t the right way to go…
I looked into the ING Direct mutual funds around the same time I opened my savings account with them and came to pretty much the same conclusion.
Well the good news is that since there is no front or back-load, you can sell whenever you want and move somewhere else. A more accurate verdict might have been ‘Average’ in the overall scheme of mutual funds. At least you avoided the 5% load!
good write-up…I gave them a passing look when opening my account and they didn’t grab my attention. You did a great job of explaining why I must have had that gut reaction. thanks!
I think many would like an overview of short term (2 yrs or less) CD rates–just like you do for money market rates.
Totally agree. Of course, most mutual fund ER will be outrageous comparing to what Vanguard charges. In Vanguard we trust.
Check this out. A free online book that’s worth $59.85. The free online book on Author’s homepage. I have the 1st edition of this book and it is probably the best investment valuation book ever written.
I actually have my Roth IRA set up with them. For 2 basic reasons, back earlier this year I wasnt money savy and I didn’t have any investment accounts but I knew I wanted to start a ROTH, especially knowing I could move it later once I got investment acounts started. Well, so far I’ve made 7% as of today since Jan when I deposited the money. Better than my 401k is doing at about 3% since the beginning of the year. I won’t stay with them forever since I’m now more knowledgable, but as long as I’m making decent returns, I’m not going to move it.
I have my Roth IRA account with ING. Had it for about 15 months now. The returns have been very pleasing. I am currently using their Aggresive investment category. Overall, between the Roth IRA and the Savings, they have just been making me money (not very much, as I don’t have very much to invest), but they have been doing well.
I have the small cap fund with ING. The good thing is that they have no minimum amount per purchase after your initial purchase. I typically do about 40 bucks a weeks.
I have real estate fund and the large cap and not being very savy about the expense ratios, I would say they are doing pretty good. They are both up atleast 450 dollars for 3000 that I invested about 3 to 4 months ago.
I have ING funds through my works 401k. I hate them.. they are lame lame lame.. They charge way to much in fees.. way way way higher than anything else I’ve seen. I recommend anyone looking to invest go with Trowe Price or Vanguard. They have the lowest fee’s of ANYONE out. (and the folks there will be upfront with you about ALL fee’s unlike ING!) The lame manager at ING tried to tell me well the fee’s cover this and that and those that don’t charge that much aren’t good. I laughed in his face and asked where he got his training.. (he said online! probably from ING!! lol) lame lame.. Don’t fall for the managers crap. They get paid by ING to recommend. The less you pay in fee’s the more money you have to reinvest!
I do own funds at ING — IDROX, TDGTX, IDMOX, IDFOX. Yes, you can sell anytime you want, but the catch is that you are restricted to 4 “Exchange or sell” per year. (This is to discourage market timing, that’s what they claim). This is the biggest disadvantage I see in ING.
Thanks for the writeup. I had a small cap IRA with them. The only reason I used them is the small minimum required to get in and because I have an interest bearing savings account with them.
the small cap tanked this year when the subprime thing started hitting – as you might imagine — and I moved it ,not early enough, to a money market fund. It is gaining there, but I am not that impressed with the performance of any of their funds. I would rather be in Vanguard and will move there when I can.
Hi,
I really appreciate all your posts, and helpful info. I am a young professional (24), with only about $2000 to get started investing for retirement- looking primarily for high risk/return funds. Any recommendations of funds (with low minimums) to get started with looking into (which led me to look into ING initially)? Any info. or help would be greatly appreciated- with so many 1000’s of funds, it’s a bit overwhelming to get started.
Don’t be stupid about ING and it’s subsidies. ING Funds (401k) is NOT ING Direct (“15 No-Load Mutual Funds” – from website). Same parent, whole different little company though.
Hi,
I have a number of old 401K accounts and a a couple other investment accounts with small amounts in them. I have a new roth IRA w/ ING (that I want to move) and about 15K in cash. I’m 31 and the 15K in cash is an emergency fund and some savings for an upcomming engagement. That being said the rest of my accounts are a mess and probably total about 20-25K. They are so spread out that I can’t keep track of them. I went to my local credit union and they have a finacial advisor who will work with you on these things for free. One of the first things she thinks I should do is open a Pershing account. I have never heard of this before. Is this a good idea and if so what questions should I ask and what types of fees should I look out for? After that I need to totaly reallicate my investments. I am considering some of the Vangaurd retirements funds, but other then that I’m not sure. Any help would be appreciated.
I think most of ING Direct’s funds are a waste of time given the expense ratio, but the sector specific Finacial, REIT, and REIT Global funds are not too bad for two reasons. First, if you get your order in online by 330/4pm, you get that day’s closing NAV. This is great for the financials which can be easily tracked – so no surprises when submitting an order two days prior and having the market bounce between then (Vanguard). Also, the sector specific fees are more in line with the industry average.
I also like that the starting minimum can be waived if you agree to 100 monthly automatic investment plan which can be turned off once you reach 1000. Yes, fees are high and maybe the funds arent the greatest, but there are several pros for the sector funds.
Thank you all for your valuable feedback.
Potential ING Investors be-aware.
I invested some $ 3,000 in ING’s “self-directed” funds in June 2007 – the current value is a miserable $ 2,200.00. the portfolio consists of:
> Fidelity True North Series B
> Brandes Int’l Equity
> CI Harbour
> Trimark Canadian Bond
> Trimark Select Growth
> CI Value Trust
Am now finding a way to ship out of this portfolio.
Has anyone looked into the SEP IRA Guranttee product form ING ?
They are charging 2.40 % + $35 every year as fee.
The gurantee is 6% yield regardless of the market conditions.
So if your investments are loosing money you will get net 6% gain.
If your investments are making money say 10% yield you will gain 10% – [(2.40% + $35) fee] as your profit.
Comes with penalty if you take the money out before 8 years. (much like a CD)
Any input will be highly appreciated.
You were very correct about ING funds. Index Plus MidCap Fund has been a poor performer at best. Most of their funds are sub standard as well.
he all,
Im a struggling young single mom, i have 4000.00 money at hand that i have been saving for 3 yrs that i wish to invest in mutual funds for me and my daughter’s future, since theres only two of us. I need to survive.
I know nothing about Mutual Funds but i have heard from few people that it is somehow a good thing to make my money work.
Reading from all your inputs about ING’s…i dont know where else to go that is safe for my hard earned savings and will deliver me good returns.
your help and inputs are much appreciated.
Thank you all
ING has taken lot of people for a ride with their Large Cap Quant scheme. At the time of roping them in, jan 2010, they had shown the above projections and have in actuality performed with NET returns of less than 5% over last 15 months period. I dont know how they can be brought to books through SEBI, Consumer Court or Central Govt for misrepresenting, cheating & fraud
ING retirement has to be the worst place. The fees are high and once you have your money with them, getting it out is an act of congress. I WOULD AVOID ING AT ALL COSTS. YOU WOULD BE BETTER OFF WITH YOUR MONEY IN YOUR BACK YARD.