ARNOLD KLING
August 14, 2011
The Top Political Contributors
August 11, 2011
Gender and the New Commanding Heights
August 11, 2011
Jamie Galbraith Makes an Assumption
August 11, 2011
Macroeconometrics: The Science of Hubris
August 10, 2011
Real and Nominal Bond Yields
BRYAN CAPLAN
August 14, 2011
The Effect of Thumb Sucking on Income
August 12, 2011
The Voice of Cold, Hard Truth to All Would-Be Educators
August 12, 2011
Ability, Morality, and Prosperity: A Paper and a Report
August 11, 2011
The Theory of Time and Frittering
August 10, 2011
Male Variance and the Remnants of the Gender Gap
DAVID HENDERSON
August 9, 2011
Hayek in "Unbroken", Part Two
August 8, 2011
Hayek in "Unbroken"
August 5, 2011
James Bovard on the Peace Corps
August 4, 2011
Summers Way Off on FDR and 1941
August 3, 2011
The "Amazon" Tax
SHARE
The overall access to Fund policy, missed even by the Government. Simply an attempt to get answers, which most Mutual funds still do not provide. lgl
The SEC chairman was on CNBC recently to present the rationale for this regulation. His claim is that it was necessary to handle conflicts of interest. I'm not entirely persuaded by his reasoning, but I understand his motivation. The fundamental problem that I see in the mutual fund market is that consumers are unwilling to spend the time necessary to inform themselves about financial products. I'm not what policies the SEC could promulgate to address this.
I admit to being surprised that no one has studied this issue in a methodical way. Doesn't seem like it would be too tough, given the data, to see if there is any significant difference in fees between funds with independent chairmen and those without. I'd leave performance out of the analysis, because that's extremely difficult to measure.
Glassman seems to be arguing that funds with outside chairmen have higher fees than those with insiders. It seems to me that she might direct some criticism toward herself. I suspect she herself could have had a study done to investigate this without too much trouble.
I will say that, if there is no effect, I think outside chairmen are to be preferred, but that's probably far from the biggest problem in the industry. I'm not sure what the boards actually do to earn those big fees. (Anyone out there want to explain how the fees are set by free competitive markets?) Maybe there just is no need for them at all, in their present form.
I agree with Jervis that investors should look more carefully at things like reported expenses. One thing I'd like to see is funds reporting the actual expense incurred by the investor on the statements. If you had $10,000 invested at the start of the quarter, the fund earned 3% for the quarter, and has an annual expense ratio of 1% your statement would read something like:
Starting value: $10,000
Gross Return 300
Fees (25)
Ending value $10,275
That would get attention, and do a lot to hold fees down. Dollars have a bigger impact than percentages.