MutualFundWire.com
The insiders' edge for 40 Act industry executives!
an InvestmentWires' Publication
an InvestmentWires' Publication
|
|
MutualFundWire.com
The insiders' edge for 40 Act industry executives!
an InvestmentWires' Publication |
|
Tuesday, July 5, 2005 Fund Supermarkets: The Next Fee Frontier? Fund supermarkets' less than upfront fee tactics come under fire in a recent Wall Street Journal article. The Journal sheds light on the fact that investors buying funds through a "no-fee" supermarket like Charles Schwab or Fidelity are actually paying fees embedded in higher fund expense ratios. Investors who try to buy the funds directly may still be paying the "no-fee" fee. And fund managers trying to correct the problem are finding the supermarkets' iron grip on their distribution system a bit difficult to work with. Bridgeway Capital Management is one of them. The Journal reports that Bridgeway, which made its funds available through Schwab investors willing to pay a transaction fee, introduced a share class with a higher expense ratio for no-fee platforms for several funds, and tried to get Schwab to make those shares available. What was Schwab's response? The discount broker stuck to its policy of offering the lowest-cost shares, a stance that Fidelity also maintains. This practice may cause certain investors -- who are investing larger amounts of money and for longer -- to keep paying more than if they were invested in a lower-ratio share class with an upfront fee. But whether these investors make a stink and the supermarkets respond remains to be seen. Printed from: MFWire.com/story.asp?s=10008 Copyright 2005, InvestmentWires, Inc. All Rights Reserved |