Watch out for coal in your stockings. Chuck Jaffe is holding the fund industry's feet to the fire in a Christmas wish list themed column. Much of the column
, though, makes little sense. Jaffe, whose writings on the fund industry are syndicated nationally, says that he wants to be treated "like a valued business partner rather than a sucker."
While many in the fund industry may like to brush off Jaffe's opinions, his thoughts and those of other prominent columnists are increasingly important as regulators and legislators hold a finger to the wind to check on public opinion.
At one point Jaffe calls for funds that sell well but don't turn in superior performance to be closed.
"If a fund's biggest selling point is that management can sell it - rather than manage it at a superior level - it should be out of business. Killing off mediocre funds that add more to the manager's bottom line than to the customer's would be a blessing," writes Jaffe.
"Just because management can sell a fund doesn't mean that fund deserves to exist. There are countless funds out there that do nothing special - that aren't superior to or different from the competition - but that are simply a means for bringing more money under management," he argued earlier in the column.
Jaffe seems to overlook the fact that fund shareholders are free to invest in any fund, or reinvest in superior funds, with few barriers. Those fund firms must be doing something to attract and keep their investors, even if Jaffe does not see it.
He also asks for the fund industry to:
Offer a clear, concise table of all fund expenses, including the disclosure of stock-picking costs.
End 12b-1 fees.
Charge fund advisory fees inline with separate account fees charged to pension funds and affluent investors.
Provide break points on advisory fees as fund assets grow.
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