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Rating:Morningstar Calls for a 'Sweeping Overhaul of Fund Expense Ratios' Not Rated 5.0 Email Routing List Email & Route  Print Print
Thursday, October 21, 2010

Morningstar Calls for a 'Sweeping Overhaul of Fund Expense Ratios'

News summary by MFWire's editors

Fundsters interested in possible 12b-1 fee reform may want to check out Morningstar today. Karen Dolan, director of fund analysis, sent a letter to the Securities and Exchange Commission, arguing that the proposals on the table for changing 12b-1 fees don't go far enough.

"We urge you to consider a sweeping overhaul of fund expense ratios, from top to bottom, that would break fees into appropriate, easy-to-understand buckets and standardize the accounting," Dolan wrote. "Step in and help bring the virtues of simplicity and transparency back to the mutual fund industry."

In the letter, Dolan asked the SEC to start from scratch and require the breakdown of mutual fund fees into four basic parts: administrative overhead, advice, management , and sales and marketing.

"Each of these activities is a legitimate use of fund assets," Dolan added, "but, without knowledge of how much is being funneled where, fund shareholders have no way to know if the balance between those activities is in line with their needs and expectations." 

Edited by: Neil Anderson, Managing Editor

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