Mutualfundreform.com

With over $ 270 billion in assets, target-date funds (TDFs) continue to be the default provision favorite for millions of future retirees as part of the Pension Protection Act of 2006.  But despite their wild popularity, TDFs have yet to overcome what many consider some fundamental design flaws that make them the less-than-perfect default investment choice for millions of investors. One of these major shortcomings occurs when a person actually…

While they will not take effect until April 2012, the first changes from the new DOL disclosures have already emerged, months before the new rules are slated to become effective.

 “The U.S. job market is showing signs of a sustained recovery. But the country’s prolonged struggle with unemployment will leave scars that are likely to remain for years, if not generations.” –Ben Casselman, The Wall Street Journal, Jan. 9, 2012 While the prevailing mantra for the upcoming election is “job creation,” the better long-term goal may be the daunting task of replacing the trillions in lost wealth from the housing…

If you participate in a 401(k) plan or have a role in administering one, the year 2012 will be important.  The reason: 2012 is when administrators and plan participants will be discussing about the little-known practice of revenue sharing and how their 401(k) plan providers charge for their services. On April 30, 2012, the Department of Labor’s (DOL) new fee disclosure regulations go into effect, largely due to the “unprecedented attention” about the need…

At one time, Europe was considered the trendsetter in fashion, design and political thought.  Now, a new study by Greenwich Research shows that Europe is leading the way in fee reductions and introducing new investment products centered around ETFs and specialized funds. The reason for the re-positioning is due to Europe’s new economic realities. The 2011 European Intermediary Distribution study found that in order to remain competitive and provide a…

The debate over the benefits of active investment management versus passive investing remains a favorite topic of investors.   Whenever new data emerges to buttress the long-established argument that index funds, which use passive investing, outperform on all measures compared to active-funds, the strategy gains more attention. 

Average Annual Total Returns (as of 10-31-2011) YTD Returns at NAV     1 Year 3 Years 5 Years 10 Years 15 Years     Standard & Poor’s 500 Composite Index N/A 8.07% 11.41% 0.25% 3.69% 5.77%     DJIA N/A 10.34% 11.80% 2.53% 5.39% 7.04%     NASDAQ N/A 7.06% 15.97% 2.55% 4.73% 5.39%     MSCI All Country World Index ex- USA N/A −4.25% 13.43% 0.08% 8.05% 5.39%  …

When it comes to taking sides publicly on major social issues, corporations have not led the way.  Stating a position is not what corporations do.  Getting the needed corporate consensus is time-consuming, requires direct participation by top executives and the board of directors, and uses political capital to arrive at a consensus. Then, the risk exists that the deciision will offend some constituents. So it is not surprise that no financial…

First it was individual stock selection, than manager expertise, then investment styles (e.g., large-cap, small cap value), then asset allocation.  Now, a new study shows that the industry fashion is alternatives, which is a general term for both alternative strategies (long-short, leveraged, or absolute return) and the foray into different sectors (commodities, real estate) or strategies (managed futures, hedge funds, convertible arb, take-overs.) The good news is that alternatives in…

Most of the discussions about the need for greater transparency in financial transactions has centered on the need to adopt greater fiduciary responsibilities. But there is also another reason: economic. Mutual funds benefit financially from the lack of transparency.  When fund companies make it difficult for investors to choose between the 8,029 mutual funds and 21,631 different share classes*, the fund companies stand to profit. That’s why fund companies intentionally…