The emerging accounts of thievery in the world of mutual funds confirm, for me at least, something I have suspected since the go-go 2000s the existence of an economic predator class.
I believe today's mainstream, sanitized, and institutionally sanctioned financial crime rackets are being run by a new breed of crook. There have always been scandals and crooks in the history of American money, but our predator class is a distinct creation of the late 20th century.
My guess is that financial historians will start the clock in this epoch with the big merger scandals of the 1980's which includes Ivan Boesky, Michael Milken and scads of lesser cads. Next came the long running, now forgotten, S&L scandals. Then a lull (maybe), punctuated by the pretty picture of the tech boom. That delusional portrait was been redrawn when we learned of the rigged IPO's, insider trading, completely corrupt "analysis" practices at the Wall Street giants and old-fashioned flimflam.
So now we'll be told that the market, smarter than any deliberately organized system, will correct this. After all, who would invest in a known corrupt game? No one, so the market will make fix it. Plus, the regulators are on the case.
SEC-Mandated after tax reporting rules mean funds must report as a return what the investor actually takes home, not what the fund manager generates. This will make it easier for CPAs to compare funds because all will use the same reporting standards.
Most mutual funds have increased their industry and sector fund offerings in areas such as energy, financial services, health care or technology. Exchange-traded funds also are a popular alternative for clients concerned about the tax consequences of mutual fund investing. And mutual fund companies also are making more hedge funds and funds-of-funds available.
As originally conceived, mutual funds had serious flaws, some of which are described here. The industry responded. Total shareholder costs on equity mutual funds declined 40% over the last two decades, funds now come in every size and flavor and management has worked diligently to reduce the annual bite for taxable investors by lowering portfolio turnover.
Exchange-traded funds answer some tax and fee problems as well. With ETFs, investors don't realize gains until they sell their shares. Fees for the indexed versions are now averaging under 20 basis points compared with 100 basis points on traditional open-ended funds.
Before you can plan a mutual fund strategy, you need to have a clear picture in your mind of your goals as an investor. You also need to determine the amount of time you have to reach those goals. Investing is time-sensitive, so you will always need to factor time into any investing strategy.
Generally, having five to eight funds in your fund portfolio should meet your investing needs. The key to your strategy is figuring out your timeframe, risk level and asset allocation first before looking at fund categories and finally plugging in the actual funds.
I believe today's mainstream, sanitized, and institutionally sanctioned financial crime rackets are being run by a new breed of crook. There have always been scandals and crooks in the history of American money, but our predator class is a distinct creation of the late 20th century.
My guess is that financial historians will start the clock in this epoch with the big merger scandals of the 1980's which includes Ivan Boesky, Michael Milken and scads of lesser cads. Next came the long running, now forgotten, S&L scandals. Then a lull (maybe), punctuated by the pretty picture of the tech boom. That delusional portrait was been redrawn when we learned of the rigged IPO's, insider trading, completely corrupt "analysis" practices at the Wall Street giants and old-fashioned flimflam.
So now we'll be told that the market, smarter than any deliberately organized system, will correct this. After all, who would invest in a known corrupt game? No one, so the market will make fix it. Plus, the regulators are on the case.
SEC-Mandated after tax reporting rules mean funds must report as a return what the investor actually takes home, not what the fund manager generates. This will make it easier for CPAs to compare funds because all will use the same reporting standards.
Most mutual funds have increased their industry and sector fund offerings in areas such as energy, financial services, health care or technology. Exchange-traded funds also are a popular alternative for clients concerned about the tax consequences of mutual fund investing. And mutual fund companies also are making more hedge funds and funds-of-funds available.
As originally conceived, mutual funds had serious flaws, some of which are described here. The industry responded. Total shareholder costs on equity mutual funds declined 40% over the last two decades, funds now come in every size and flavor and management has worked diligently to reduce the annual bite for taxable investors by lowering portfolio turnover.
Exchange-traded funds answer some tax and fee problems as well. With ETFs, investors don't realize gains until they sell their shares. Fees for the indexed versions are now averaging under 20 basis points compared with 100 basis points on traditional open-ended funds.
Before you can plan a mutual fund strategy, you need to have a clear picture in your mind of your goals as an investor. You also need to determine the amount of time you have to reach those goals. Investing is time-sensitive, so you will always need to factor time into any investing strategy.
Generally, having five to eight funds in your fund portfolio should meet your investing needs. The key to your strategy is figuring out your timeframe, risk level and asset allocation first before looking at fund categories and finally plugging in the actual funds.
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