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Friday, June 07, 2013

The SEC Smiles On Small Investors

News summary by MFWire's editors

Good things come in small packages, right?

But small investors aren't often depicted as being great in fact, they're commonly portrayed as being of a herd mentality. Looks like the SEC is ready to start changing that image, at least in the money market mutual fund business.

Morningstar's John Rekenthaler reports that, in a statement on money market fund regulation, SEC Chair Mary Jo White discussed proposed alternatives to current rules that would require that all institutional prime money market funds operate with a floating net asset value (NAV).

"This floating NAV proposal specifically targets the funds where the problems during the financial crisis occurred: institutional, prime money market funds. Retail and government money market funds which have not historically faced runs in even the worst of times would be exempt from the proposed floating NAV requirement."

For many analysts, this is a long overdue train of thought from the SEC. Small investors were actually thinking intelligently and independently during the financial crisis. Generally, they didn't freak out when problems came up, whereas institutional investors, who are constantly comparing themselves to their peers, stirred panic and executed poorly planned decisions.

For more, check out the full Morningstar story here.  

Edited by: Nicole Spector


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