Monday, April 16, 2012

Selected Recent Articles about Costs

401(k) Costs Disclosure Doesn't Go Far Enough:  "This year, 72 million Americans will open their quarterly 401(k) statements and for the first time get a glimpse of the cost of their plans as spelled out in new fee disclosures.  ...   At best, the [new] rules give participants and plan sponsors a tiny window into costs."  InvestmentNews (subscription required), April 2, 2012

Traditional Managers Feel Heat to Reduce Fees: "Active equity and bond managers are cutting fees on some institutional strategies, joining their more costly alternative investment management counterparts in offering savings to belt-tightening pension funds."  Pensions & Investments, April 2, 2012

Pensions Find Riskier Funds Fail to Pay Off:  "Calpers ... is pushing the managers of [its] funds for lower fees ... .  'I think it's part of our job as public fund managers to do our best to drive a better bargain,' said Joseph A. Dear, the chief investment officer for Calpers."  The New York Times, April 1, 2012

Adviser Pricing Transparency is Coming:  Morningstar is debuting a comprehensive database of advisers' fees and commissions.  "...[M]any advisers are concerned that greater transparency [due to the database] may lead to lower pricing."  InvestmentNews (subscription required), April 9, 2012.  You heard it here first:  a marketing department or two will spin the adviser-first, client-second thinking of the quoted sentence into a spiel along these lines:  lower, commodity-type pricing isn't good for pension plans and other investors because that pricing deprives managers of the resources they need to produce desirable, market-beating returns.  In other words, the spiel will be that one gets what one pays for.  That you, the investor, may think you want lower costs.  But trust us, you really don't.  (However, in fact and as noted before on this blog, quoting Jack Bogle:  in investing, one gets what one doesn't pay for.)  

Georgia House OKs "Alternative" Pension Investing:  This article makes the remarkably unsupportable statement that alternative investments typically yield higher returns than traditional stocks and bonds.  Atlanta Business Chronicle, March 26, 2012

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