Saturday, July 24, 2010

SEC Proposes to Better Protect Mutual Fund Investors From Fees

On Wednesday the SEC proposed new rules intended to improve the transparency of mutual fund investors' payments of fees for funds' marketing and selling costs. (The payments are indirect, occurring via deductions from funds' assets.) The SEC also proposes to limit these fees in certain circumstances.

The fees totalled a few million dollars thirty years ago, when the fees were first permitted. In 2007 alone the fees, which are ongoing (aka never-ending), totalled $13 billion, or approximately $40 for every woman, man, and child in America. Given the sums involved, expect a ferocious effort by the mutual fund industry to neuter the proposals.

A relatively simple topic has become overcomplicated: the SEC proposal is 278 pages long. Although the SEC is moving in the right direction, avoid the fees and their complexities: when buying mutual funds stick to true no-load funds that also don't assess investors for the funds' marketing and selling costs.

August 1, 2010 supplement: see also a related article ("Small Step on Small Fees, but Big Charges Remain") at:

No comments:

Post a Comment