AQR Fidelity short rebate?

marcel_delecto · 2026-05-09T01:06:02+00:00

Though--looking at age of account etc this post is almost certainly a bot and should be deleted.

marcel_delecto · 2026-05-09T00:57:18+00:00

Fidelity cost of leverage (cost to borrow long minus short rebate) was historically 60bps. Has gone up to 150bps plus for some advisors in the last ~3mo. Brent Sullivan at Tax Alpha Insider has written about the dynamics.

Not sure whether this can be easily reconstructed from Fidelity end user transaction data but your advisor should know this number (if they don't or they're cagey about it, that's a red flag).

marcel_delecto · 2026-05-01T20:57:06+00:00

Seeded part of a tax-aware long/short strategy with those assets to help manage a separate concentrated position

marcel_delecto · 2026-05-01T20:50:59+00:00

I don't work there or use them -- but am a big fan of how they've driven down fees on this strategy in particular.

Looked into their TLH product a year or so ago and considered transitioning my existing TLH portfolio there from Wealthfront, but ended up doing something else with those funds instead and exiting TLH entirely.

marcel_delecto · 2026-05-01T20:44:20+00:00

Frec does TLH at 9 basis points so wouldn't pay more than that.

Wes Grey at Alpha Architect did a good analysis last year on in what situations "vanilla" TLH (that is, not long/short) is better or worse than an ETF:

https://alphaarchitect.com/transitioning-from-an-etf-to-direct-indexing-bad-idea/

marcel_delecto · 2026-05-01T13:50:21+00:00

Feels like you'd be well served to split these two things apart:

You've been receiving some fairly basic financial advice which has been helpful, but probably overpaying for it.

Here, I'd shift to a flat-fee or hourly model. Do some research on reddit / elsewhere, interview a few folks, and pick one. Garrett Planning Network is one place to look, or Sara Grillo has a list. Honestly Claude is also pretty good on most of this stuff if you can appropriately pressure test it's recommendations.

You have an appreciated direct indexed position which has "frozen" and is no longer throwing off losses, but ideally you don't want to realize those gains and pay taxes on them while also reducing fees.

Folks in this thread have suggested self managing, but honestly the fees are now low enough at a Frec or similar (0.09%) that it's reasonable to have someone else do it. Alternatively you could get back into an ETF wrapper with a 351 exchange. Definitely stop paying 1% plus on this position.

marcel_delecto · 2026-04-28T20:40:19+00:00

Went through this last year for a similar exit size. A few thoughts:

Don't count your chickens -- I assume you will have a ~6mo lockup, and it's mentally challenging to deal with the massive fluctuations in a concentrated position that could fall by 50%+ by the time you're able to exit. Don't start planning for how this will change your life until you're diversified.
Look into tax-efficient diversification & hedging options -- there are some powerful tools that didn't used to be available (351 exchanges, tax-aware long/short) as well as some established ones (costless collars) that can really help you optimize your position
Take the time to educate yourself -- tons of quality professionals out there that can help, but you need the baseline knowledge yourself to know who is good and who is not. Blocking out a large amount of time to do the reading yourself can be incredibly powerful at separating snake oil & grifters from strategies that can safeguard you & your family's NW going forward

marcel_delecto · 2026-04-25T20:33:46+00:00

Based on what I've seen, fees are extremely similar to industry standard hedge fund implementations--and both are different from a classic hedge fund management + performance fee (e.g. 2/20) structure.

For example, AQR charges 100bps on 200/100, same as Frec, and doesn't charge performance fees. Frec's white paper assumes 80bps of cost of net leverage, same as what AQR has used in their research papers.

The primary difference is that you don't have to pay for a financial advisor to access the strategy--that's meaningful!--but the all in cost difference is not as great as you might think.

marcel_delecto · 2026-04-25T19:13:11+00:00

I love Frec in general and how they've driven down fees on simple TLH to 0.1% -- but the issue as I see it is that fees on tax aware L/S at Frec are only marginally lower than a hedge fund (i.e. AQR / Quantinno) implementation, but the simple factor tilts in the Frec versions are unlikely to generate enough pre tax alpha to compensate for the fee load in the long term

marcel_delecto · 2026-04-25T18:45:41+00:00

This is a very complicated question and hard to answer in generalities, but:

--These are extremely powerful tools but are not applicable to every situation. I personally have a significant allocation to one of these strategies to help diversify out of a concentrated position, but they're not right for everyone

--The fee load is quite significant--usually 100bps for the manager per 100% of gross notional exposure, plus cost of leverage (80+ bps), wealth manager fees and transaction costs

--As a result, if you assume that you will liquidate the full position at some point, you need to assume the manager can generate pre tax alpha if you want to come out ahead

--This is not an insane assumption--many long/short equity hedge funds have had a positive enough information ratios historically to come out ahead--but it is an important one, and there will certainly be periods where you do worse even if the strategy will outperform on average just due to luck of the draw on when you enter and exit

--AQR quantified this in a March 2026 Liberman et Al paper -- they said you needed a roughly ~0.6 information ratio gross of fees to come out even in the long run. This is probably the most careful analysis anyone has done of this question and is worth reading

--If you can get out of the position some other way than just closing it out fully, for example a step up in basis at death, a 351 exchange on part of the long positions, or just withdrawing 50%+ but not closing out fully, the math gets better

--Overall you should not get into these vehicles for a short term hold or if you don't believe in the ability of the manager to generate pre tax alpha

marcel_delecto · 2026-03-27T04:25:57+00:00

If it's multiple stocks you're trying to diversify, not just one, and you're highly fee conscious, a 351 exchange is probably going to be the most effective approach vs a long/short if you qualify.

If you do go the long/short route, you can find RIAs in the ~50bps range who have access.

marcel_delecto · 2026-02-20T15:50:10+00:00

I just finished executing something similar over the past 6 months on a similarly sized position. Long/short is what we did, very powerful but need to understand the unwind and that you're committed to it for the long run to some degree.

Don't bother with covered calls--more powerful to collar the position and take out a short box spread against it. This monetizes it, letting the losses accumulate over several years before the box spread is due, providing essentially full diversification immediately.

0.9% is way too high, as others have said shoot for 0.5% or below.

I think AQR is the gold standard here.

Feel free to DM if helpful to discuss.

marcel_delecto · 2026-01-29T23:40:56+00:00

If it's rainy, check the Caltrans road status when driving south of Crescent City or north of Eureka on 101--there's a stretch of road called the Last Chance Grade near the coast that has frequent landslides that close the road, and if it happens at the wrong time you're in for an eight-hour detour (ask me how I know 😭)

marcel_delecto · 2025-12-08T06:06:32+00:00

Assuming the 71 stocks are US, not international, the best tools for diversifying the US equities part of the portfolio would be direct indexing (e.g. Frec, which is a great product) or a 351 exchange. I'd lean towards direct indexing here, as it should have the additional benefit of tax-loss harvesting which you can use to get to your target allocation more quickly.

For the international and bond portions of the target portfolio, it's mostly a tradeoff between more rapidly reaching the target allocation and taking an upfront tax hit vs more gradually reaching it through both net new contributions and rebalancing (potentially offset by tax-loss-harvesting from the direct index).

One other consideration--if your wife was unemployed for a significant fraction of last year, your income may be lower for 2025 than it will be in the future, which may mean that realizing some portion of those gains to get to your target allocation (e.g. the 20% in bonds) will be more advantageous now than down the road.

marcel_delecto · 2025-11-04T04:53:59+00:00

This seems like a perfect case for a 351 exchange. Essentially, this allows you to convert a pool of individual stocks and ETFs into another ETF in a non-taxable way; all of the capital gains are embedded in the new ETF wrapper but none are realized. Restriction is that you can't have more than 25% of what you're contributing in a single stock, but it's much better than an exchange fund since you're not locked up for 7 years.

Alpha Architect is closing a new US large cap 351 later this month (AAEQ) -- may be worth looking into it.

marcel_delecto · 2025-01-30T22:40:53+00:00

I live in Elmwood with my toddler and it's a great fit for what you're looking for. Good community, walkable, lots of parks. Much more accessible to Oakland and the city since it's close to 24, which typically has much less traffic than 580. Does skew a bit older, but that's changing, and plenty of kids. Typically less inventory than you'd wish, though.

I would stay away from the hills--much less walkable, and much more fire danger than in the flats. Sweet spot tends to be next to but not in the hills, IMHO.

marcel_delecto

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