Most funds companies are not fiduciaries

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.

Most funds companies are not fiduciaries

Postby Rick Ferri » Thu Feb 14, 2013 8:37 am

Here is an interesting comment from Scott Simmon's Fiduciary Focus column on Morningstar.com.

"Mutual fund companies do not have a fiduciary duty to investors in their mutual funds, but they do have a fiduciary duty to shareholders in those fund companies. That set-up characterizes Fidelity, for example, but it doesn't characterize Vanguard, because Vanguard does have a fiduciary duty to investors in its mutual funds; indeed, the investors in Vanguard funds are the same as the owners of that fund company. (The legendary John Bogle often speaks of the necessity for mutual fund management to be fiduciaries to the investors in their funds.) In the main, though, mutual funds are simply products whose management offers no fiduciary protection to those that invest in them."
Mutual fund investing is simple. There is risk, there is return, and there are costs. All else is marketing.
User avatar
Rick Ferri
 
Posts: 7759
Joined: Mon Feb 26, 2007 12:40 pm
Location: Home on the range in Medina, Texas

Re: Most funds companies are not fiduciaries

Postby hlfo718 » Thu Feb 14, 2013 11:12 am

I believe the mutual fund board has fiduciary responsibility to the investors but unfortunately many of these board members have ties with the mutual fund company, even though a majority is supposed to be independent. Hard to break this cycle when there are billions of $ involved.
hlfo718
 
Posts: 648
Joined: Wed Dec 01, 2010 10:17 am
Location: NYC

Re: Most funds companies are not fiduciaries

Postby tfb » Thu Feb 14, 2013 12:08 pm

Is Vanguard really a fiduciary? If you decide to invest 50% of your portfolio in its Precious Metal and Mining fund, how does Vanguard know it's of your best interest to do so? Does Vanguard do something to stop you?
Harry Sit, taking a break from the forums.
User avatar
tfb
 
Posts: 6675
Joined: Mon Feb 19, 2007 6:46 pm


Return to Investing - Theory, News & General

Who is online

Users browsing this forum: Baidu [Spider], Gropes & Ray, Iorek, jdb and 34 guests