Why does Litman/Gregory believe in closing each fund at a pre-determined asset level?
We believe flexibility is important. Ideally, a stock picker should be able to efficiently buy and sell stocks at the prices they deem attractive. They should be able to do this without their own trading volume influencing the price of the stock being bought or sold. However, when an investment firm runs too much money it may take a long time to buy or sell a full position because the number of shares being bought or sold may make up many days of the stocks average daily trading volume. The result is that the stock price could move against the buyer/seller during the lengthy transaction period or the buying or selling could itself move the stock price. By keeping the individual asset levels of each sub-advisor relatively small Litman/Gregory believes the Masters Select Funds will have several advantages. Because Masters Select requires the sub-advisors to hold only their highest-conviction ideas, it is not unusual for a stock to be sold in a Masters Select portfolio at a time when it i
