Most funds companies are not fiduciaries

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Rick Ferri
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Most funds companies are not fiduciaries

Postby Rick Ferri » Thu Feb 14, 2013 7:37 am

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

"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."
The views expressed by Rick Ferri are strictly his own as a private investor and author and do not reflect the views of any entity or other persons.

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Re: Most funds companies are not fiduciaries

Postby hlfo718 » Thu Feb 14, 2013 10:12 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.

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Re: Most funds companies are not fiduciaries

Postby tfb » Thu Feb 14, 2013 11:08 am

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?
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