Investment Philosophy

TPG believes this topic is so important that we encourage anyone considering interesting in becoming more financially aware to read it, preferably prior to becoming TPG clients.

Within the investment community there are essentially two distinct investment philosophies and we strongly believe that clients and potential clients have to understand these two philosophies and gravatate to the one they are most comfortable with.


Active vs Passive Management

Within the investment community there are two schools of thought. One is that with if you spend enough money and hire the right professionals, they can determine not only which stocks to buy, but when to sell them. Brokers espouse this view when they buy and sell individual stocks, and many financial planners and bank employees espouse this view when they encourage you to buy mutual funds.

ETFs compared to mutual funds

ETFs trade on an exchange. Each transaction is subject to a brokerage commission. Commissions depend on broker, with various "plans" and different conditions, so no simple rule can be given. A "typical" schedule (at least in the United States) is $10 or $20, increasing slowly, or not at all, for larger orders. What is clear, however, due to the quasi-flat charge, amount invested has a great bearing; someone who wishes to invest $100 per month may have 10% of their money vaporized immediately, while for someone making a $200K investment, commission may be, essentially, negligible. Generally, mutual funds obtained directly from the fund company itself do not charge a brokerage fee. Where low or no-cost transactions are available, ETFs become very competitive.