Tricked by Mr. Market: Bill Miller, manager, Value Trust: “Every decision to buy anything has been wrong.”

These losses have wiped away Value Trust’s years of market-beating performance. The fund is now among the worst-performing in its class for the last one-, three-, five- and 10-year periods, according to Morningstar. Here is the type of learning opportunity that will become increasingly available as chronicles of the demise of stock pickers and market [...]

Costs of mutual funds on the rise

With assets hollowed out to 29%, the mutual fund industry is forecast to raise fees by 10%, a move evidently necessary to maintain capital flow in the face of far fewer dollars to manage. If active money managers cannot deliver alpha under the current cost framework, how will they reach it in a higher cost [...]

Meltdown achieves what Congress could not: 401(k) fees going down across the board

One good thing about this Bear market is that it has the power to clean up a lot of fees and expenses. Investors, and fair-minded advisers, could never seem to extend the clean-up beyond individual initiatives, while the government proved useless in this regard, tamed as it was by the lobbyists from the mutual fund [...]

Fidelity couldn’t care less about prudent investing principles

Years ago, at a speech at Harvard, the famous, or infamous, George Soros said that the trouble with mutual funds is that they are rewarded by the amount of money they collect, not the amount of money they earn. Seeing the remark as an astute summary of a range of flaws and weaknesses of funds [...]

Tax bills for fund shareholders in the worst year for financial markets since the 1930s

Here is the first concrete example we’ve found of the losing proposition mentioned in several posts over the last three weeks. Many more are on the way. Mutual fund shareholders who have lost up to 50% will face serious taxable events as a result of manager sell-offs to generate cash for redemptions. One statistic we’ll [...]

Mutual fund industry loses over 20% of assets under management

The mutual fund industry has never seen these kinds of losses before;, in additiion, the marketplace has never offered so many popular, transprent, and low-cost alternatives to mutual funds. These two novel factors make it reasonable to suppose that a good portion of this capital may never come back. Mutual-fund firms rocked by asset decline [...]

The shift continues: Net take for actively managed mutual funds to plummet over next 3 years

Over the next tree years, parts of the mutual fund industry will start to resemble a distressed telephone company, making up for a loss of volume by charging more to the customer who fails to flee. Meanwhile, it looks like low-cost, passive investment alternatives will look increasingly attractive to the post-meltdown investor. Fund Fees Expected [...]

Yet another trouble with mutual funds: When assets go down, fees go up

Fund expense ratios headed up in 2009 Mutual funds fees will be going up next year, with market turmoil likely to be the main culprit. Stock funds could experience an average increase in expense ratio of 0.05 to 0.1 percentage points, said Jeff Tjornehoj, a Denver-based senior research analyst at Lipper Inc. of New York. [...]

It took a meltdown: SEC finally improves mutual fund disclosure

These basic disclosure guidelines have been suggested for ages yet reasons for delay and continued study seemed unending. Not anymore. The Securities and Exchange Commission has voted unanimously to improve mutual fund disclosure by requiring that funds provide investors with a concise summary – in plain English – of the key information they need to [...]

Latest research consistent with history: Most actively managed mutual funds beaten by the S&P 500

Here are the statistics regarding investors’ ongoing willingness to pay money managers for losses greater and gains smaller than the market itself. S&P index bests most actively managed funds The Standard & Poor’s 500 stock index outperformed most actively managed mutual funds for the past five years, according to the New York-based firm’s latest research. [...]