Sunday, June 8, 2014

The SEC's Two Recent Investor Bulletins: How Costs Affect You

Earlier this year the SEC's Office of Investor Education and Advocacy published an investor bulletin about how investment costs affect a portfolio.  And recently the same SEC office published a similar, but narrower investor bulletin on the investment costs associated with mutual funds.  The first bulletin received a fair amount of press; the second bulletin not so much.

Whether a particular development external to the SEC, such as a new academic study, triggered these bulletins' publication is unknown to this writer.  Maybe the bulletins reflect only the SEC office's view that more public awareness is needed about the effect that costs have on long-term net investment performance, especially given the increasing prevalence and importance of defined contribution retirement plans.

Regardless of the reason or reasons for these two bulletins, here's the skinny:  they are helpful to their intended broad audience and they are well-written, in plain English.  Here's hoping the SEC's Office of Investor Education and Advocacy keeps the topic of investment fees and expenses top of mind -- internally at the SEC and externally with the investing public -- including by supplementing the bulletins from time to time as developments warrant.

P.S. - Please click here for a Scott Burns column in today's Dallas Morning News generally on the same topic as the bulletins.  Burns playfully uses the modus operandi of television ads that pitch the viewer on relief from maladies; he does so by giving the malady of excess investment costs a catch-phrase name:  "intermediary drain."  (Maybe you suffer from it or know someone who does?)

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