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Good Risk Governance Pays

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Category Archives: Mutual Funds

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It’s Heeeere – The Fiduciary Rule Has Arrived – Now What?

Posted in Compliance, Disclosure and Transparency, ERISA, Fees, Fiduciary Liability, Governance, Investment Management, Mutual Funds, Regulation
Like most people who work in the financial services arena, I hastily downloaded the long anticipated “Fiduciary Rule” when it was released by the U.S. Department of Labor (“DOL”) on April 6, 2016 and am busy tackling this final version. With more than two hundred pages, it’s going to take longer than a lunch break but is nevertheless vital reading. DOL’s Fact… Continue Reading

Increased Regulation of Derivatives by Registered Funds

Posted in Derivatives, Disclosure and Transparency, International Investing, Investment Management, Mutual Funds, Regulation, Risk Management, Susan Mangiero, Trading
On December 11, 2015, the U.S. Securities and Exchange Commission (“SEC”) took steps to more actively regulate how derivative instruments are used by registered investment companies such as mutual funds, exchange-traded funds (“ETFs”), closed-end funds and business development companies. According to its Fact Sheet, a portfolio manager would have to either limit leverage via the use of derivatives to… Continue Reading

Due Diligence & Regulatory Hot Buttons: What Advisors Need to Know About Liquid Alts

Posted in Derivatives, Hedge Fund, Liquidity, Mutual Funds
I am delighted to join a top-notch panel of financial speakers to talk about the explosive growth in the liquid alternatives (“alts”) market. Courtesy of the Center for Due Diligence, our session will take place on October 15, 2014 in San Antonio, Texas and will be part of what is expected to be a lively and informative conference… Continue Reading

Investment Fees and Portfolio Returns

Posted in Disclosure and Transparency, ERISA, Fees, Investment Management, Mutual Funds, Pension, Regulation
Although Whole Foods is one of my favorite grocery stores, I experienced sticker shock today when I bought fresh fish from Stop n’ Shop. Wild flounder at the former recently cost me $14.99 per pound in contrast to $7.99 at the latter. When I asked for comments, I was told that organic status might account… Continue Reading

Big News in Muni Bond Land About Public Pensions

Posted in Disclosure and Transparency, Financial Crisis, Municipal Bonds, Mutual Funds, Pension, Regulation
No doubt yesterday’s decree that pensions can be slashed as part of a bankruptcy filing for the City of Detroit have left some persons gasping for air, wringing their hands and generally caught by surprise that contractual retirement obligations may no longer be sacrosanct. As the result of a historic decision to possibly curtail pension benefits,… Continue Reading

Muni Bond Public Pension Disclosures – Still High Priority For Regulators

Posted in Compliance, Derivatives, Disclosure and Transparency, FINRA, Litigation, Municipal Bonds, Mutual Funds, Pension, Regulation
According to a November 8, 2013 press release, the U.S. Securities and Exchange Commission (“SEC”) has appointed LeeAnn Ghazil Gaunt as head of the Municipal Securities and Public Pensions Unit of its Enforcement Division. She is credited for overseeing pay-to-play actions and investigations that range from inappropriate hedge accounting disclosures and market timing. No doubt… Continue Reading

FINRA’s New Suitability Rule and Investment Complexity

Posted in Compliance, Fiduciary Liability, Investment Management, Mutual Funds
Given the confusion about suitability versus fiduciary duty, Wilson Elser attorney Janene Marasciullo (with assistance from Attorney Paula Toomey) sheds light on these timely and important topics. In “Sellers Beware: FINRA’s New Suitability Rule and the Sale of Complex Investments” (Securities Regulation & Law Report, October 15, 20212), the point is made that FINRA’s new… Continue Reading

Making Sense of Mutual Fund Fees

Posted in Fees, Mutual Funds
Following the ruling in Gartenberg v. Merrill Lynch Asset Management, many people look to the six factors discussed therein in determining the reasonableness of fund fees. To recap, the Gartenberg factors are listed below: Nature and quality of services rendered; Profitability of fund to the advisor; Scale considerations that impact the cost of managing a fund;… Continue Reading

$200 Million Settlement Paid Relating to Mortgage Backed Security Valuations

Posted in Broker Dealers, Compliance, Fraud, Mutual Funds, Regulation, Valuation
Investors rely on the net asset values (“NAVs”) provided to them as a way to make all sorts of financial decisions such as asset allocation, rebalancing, hedging and possibly exiting a particular money pool. In a recent case, the bear invaded the tent, eventually denying investors for several funds any illusion about security related to… Continue Reading

Looking For Hidden Mutual Fund Fees

Posted in Mutual Funds
In “Numbers You Can’t Count On,” Wall Street Journal reporter Michael A. Pollock (April 4, 2011) informs readers not to consider published reports as the definitive source of mutual fund economics. For example, peer group rankings may be of limited use if a particular mutual fund does not readily fit into a stated category. Then… Continue Reading

Swaps Can Bite Investors

Posted in Derivatives, Disclosure and Transparency, Mutual Funds
In “‘Swaps’ Add a New Risk” (February 7, 2011), Wall Street Journal reporter Ari I. Weinberg writes that little is known about the use of over-the-counter derivative instruments by mutual funds and that the risk of non-performance by a swap counterparty must be considered. Having worked on several derivative trading desks, I have direct experience… Continue Reading