Fund-Blazing: Morningstar Fund Analyst Blog - All Comments

Re:Top Judges Battle over Mutual Fund Fees

prscluchfc — Fri, 05 Sep 2008 05:14:12 GMT

Give Invesco AIM credit for having added dollar and cents expenses for an investor's mutual fund holdings to their statements for at least a few years now

Philip R. Spitzer CLU, ChFC

Re:Top Judges Battle over Mutual Fund Fees

phillips2k — Fri, 05 Sep 2008 13:05:58 GMT

My response to OAKMX excessive fees was to dump the fund. It was just not worth the expense compared to it's performance. There are plenty of other funds out there that are better values. I do own OAKBX which has had very good performance and a competitive expense ratio. The market place will be the deciding factor no matter what the courts say.

Re:Top Judges Battle over Mutual Fund Fees

lululu — Fri, 05 Sep 2008 13:49:33 GMT

Judges need to stay out of our business. With all the choices out there customers will make rational decisions to stay or not based on all the info. If the price is too high we don't buy. GW

Re:Top Judges Battle over Mutual Fund Fees

Donovoid — Fri, 05 Sep 2008 14:31:06 GMT

There are much different standards for transparency. I have tried to estimate my fees on my mutual fund investments, 403(b), 401(k) and IRAs. Although these are disclosed, it is impossible to figure out because of the multiple share classes and in some cases additional advisory fees layered on top.

For TRUE transparency, a monthly statement as suggested in the article would empower more people to vote with their feet. At least those that are not tied into a very limited universe of options like some 401(k) participants.

Re:Top Judges Battle over Mutual Fund Fees

Matthew9 — Fri, 05 Sep 2008 16:01:43 GMT

I have to side with Posner in this case. Some companies in this industry take care of their shareholders first and foremost and most of us here know who those few are. This case simply highlights a huge problem within the mutual fund industry as a whole. Simply put, a majority of fund boards care more about the managers than the very people they've been appointed to serve! Buffett definitely has it right in his way of thinking but unfortunately I don't see it happening very soon.

Re:Top Judges Battle over Mutual Fund Fees

lltuthill — Fri, 05 Sep 2008 17:01:04 GMT

i also recently dumped an oakmark fund because of cost vs. performance considerations. I probably would have roughed it out with the fund if its fees were lower. However, there are much pricier fund families than oakmark that might better have been the target of such a case. But I, naively perhaps, also don't see why ordinary investors should be charged fees so far above the institutional investors. In this era of electronic servicing, there are no longer the types of added costs that justify it.

Re:Top Judges Battle over Mutual Fund Fees

solhls — Fri, 05 Sep 2008 20:26:51 GMT

This complexity of this issue is based on a false premise. There is no such thing as a proper fee in a free economy, if there has been no fraud involved. In a free society, where individual rights are protected, the government has no right to interfere in the transactions between private parties.

Are we willing to lose our freedom over a disagreement on a contracted fee? I hope not!

Re:Top Judges Battle over Mutual Fund Fees

InvestorBill — Sat, 06 Sep 2008 01:11:57 GMT

The job of courts is to keep the game honest and pounce on fraudulent practices. That does not include having a say in fixing prices. If you think the butcher over-charges for fillet mignon, go to another shop. The courts and the government already have too much say in our lives. We don't need nannies. Let the free market decide. Are we becoming socialists or what? CFP, ChFC, CLU

Re:Top Judges Battle over Mutual Fund Fees

janadams — Sat, 06 Sep 2008 05:24:33 GMT

I will go with warren.

Re: Top Judges Battle over Mutual Fund Fees

jimmynj12 — Fri, 13 Mar 2009 13:58:00 GMT

One important requirement that should come out of this case is absolute fund cost transparency. This means clearly stating how much an investor paid in fees to own the fund over each calender year. Further these fees should be broken down by type such as management or 12B-1 fees and to whom each of the type of fees was paid. This is readily available to the fund and would require little space on the annual fund shareholders individual statement.

Re: Top Judges Battle over Mutual Fund Fees

erryl — Fri, 13 Mar 2009 15:54:00 GMT

There is a huge flaw in all of corporate America. Stock shareholders have little influence over their company or its management. They vote in soviet style elections where they have no choices and their vote has little meaning. Mutual fund shareholders have even less influence on their corporate boards and the selecton of managers.

It is just a big farce that needs to be replaced with something more shareholder friendly.

erryl

Re:Top Judges Battle over Mutual Fund Fees

georgek — Thu, 04 Sep 2008 15:22:54 GMT

How naive for Judge Eastman to say mutual fund investors should vote with their feet if they think a fund's expense ratio is too high. Selling a mutual fund one owns entails first probably a transaction fee, but more importantly, and especially in taxable accouts, it precipitates a capital gains tax bill, therefore forcing the mutual fund investor to have less money to invest in a now lower expense ratio fund.

For a mutual fund investor to vote with his feet ends up costing the investor a serious sum and more in the long term.

Re:Re:Top Judges Battle over Mutual Fund Fees

lonestar1910 — Thu, 04 Sep 2008 16:39:04 GMT

Prosner is correct. If one serves as a fiduciary for an infant child, they have to realize the infant cannot and should not be expected to understand all the controls and actions needed.

Either because of lack of knowledge or time commitment most mutual fund investors are in effect ‘infants’ when it comes to investing. It is the responsibility of the ‘fiduciary’ to know this about many mutual fund investors and to protect the owner’s interest. If they are not going to do this, we do not need a fiduciary or the expense of a fiduciary.

Re:Top Judges Battle over Mutual Fund Fees

rocky3743 — Thu, 04 Sep 2008 17:11:03 GMT

The stock market and the companies in it are all subject to the pressures of the free market system. Judge Posner seems to believe that mutual fund managers aren't. How can that be? The market may not be perfect, but it is certainly more efficient than any regulator will be in setting prices for fund managers. Based on my own experience with insurance regulators, one thing was perfectly clear, the more regulators got involved the higher prices were.

If, as one person commented, mutual fund investors are "infants" and do not have the time or willingness to do their research, those investors have no business buying and selling any stocks or mutual funds. They need to turn their money over to a professional.

As for the other comment that the investor may be subject to taxes on the sale to get out of a high priced mutual fund. if the investor had done any research originally, this situation probably would not have happened.

Re:Top Judges Battle over Mutual Fund Fees

mgambera — Thu, 04 Sep 2008 17:15:43 GMT

Mutual fund investors in a 401(k) plan often cannot vote with their feet because there is only one of each kind of funds. If the large-blend fund in my 401(k) plan had very high fees, should I skip US large caps in my nest egg? That is a ridiculous implication that follows from judge Eastbrook's reasoning.