Here are the highlights of his opinions that are worth reading for small investors using mutual funds as their main investment tools:
The key changes in the mutual fund industry
Over the past 25 years, the U.S. mutual-fund industry has moved from being a seller's market to a buyer's market. All of the power has shifted to the buyers of funds, or the buyers' agents. And the rise of the independent financial planners has had a huge amount to do with that, as have the gatekeepers of 401(k) plans.
The positive changes outweigh the negatives. You have lower prices, more choices, better stewardship, and more transparency. There has never been a better time to be a fund investor. The tools are unparalleled; they are better than what the top institutional investors had a decade ago.
But having said that, a concern I do have is the increased and senseless complexity. You have all the different share classes, different expenses, as a result of 12b-1 fees, [marketing and distribution fees that come out of a fund's assets]. The A shares, the B shares, the C shares -- that is the last vestige of the seller's market mentality. The industry said, "Hey, we can shift these fees around and we can pretend like we are giving investors a discount without actually sacrificing any cash from our bottom line." The whole thing was just a farce.
The problem with multiple fund share classes is getting cleaned up
It is starting to get cleaned up, but not because the fund companies are driving it. It is getting cleaned up because investors are not buying the B shares and the C shares. They've also shown a preference for ETFs recently, which don't have different share classes. They are simpler. They are more straightforward, in many ways, than what the mutual-fund world has become.
The link to the interview at Barron's website is:
http://online.barrons.com/news/articles/SB50001424053111904742804579284652021894432
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