Time to Fix the Mutual Fund Marketplace
From the Desk of Jim Eccleston at Eccleston Law LLC:
Recently, I read an interesting editorial. The author argued that, while there is an excessive amount of share classes offered by open-end mutual fund companies, there is no need. Within these share classes, there is no competitive advantage offered to the investors. In fact, the main purpose of those share classes is only to hide the fees paid by mutual funds to the brokers and to exchange of business between the companies and the brokers.
Investors usually are oblivious to what is truly going on. Mainly because they are kept in the dark. The details of sales commissions never are displayed on the investor’s statements and most are unaware of how their portfolios are being affected.
There are major differences among S&P 500 index funds in terms of charges. Charges can range from a low 0.02% to as high as 2.32%, all for the same kind of fund.
The author argues that it is time to bring investors out of the dark. To fix the broken system, 12(b)-1 fees and back-end loads need to be eliminated. Additionally, all expenses should appear on investor statements.
The attorneys of Eccleston Law LLC represent investors and advisers nationwide in securities and employment matters. Our attorneys draw on a combined experience of nearly 65 years in delivering the highest quality legal services.
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