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Fund Firms Say Too-Big-To Fail Designation Hurts Investors
FWIW, I believe the 11 funds that are under consideration as TBTF are:
SPY - SPDR S&P 500 ETF VTSMX - Vanguard Total Stock Market (all share classes combined, as are the others) FDRXX - Fidelity Cash Reserves MMF PTTRX - PIMCO Total Return VINIX - Vanguard Institutional Index VFINX - Vanguard 500 AGTHX - American Funds Growth Fund of America AEGPX - American Funds EuroPacific Growth VGTSX - Vanguard Total International Stock Index FCNTX - Fidelity Contrafund VBMFX - Vanguard Total Bond Market Index
The article says the fund companies are saying that because these are just vanilla funds that don't make extensive use of leverage, they can't be harmful to the financial system in times of stress.
I thought that the use of leverage and other "esoteric" instruments was precisely the difference PIMCO claimed between PTTRX and its ETF non-clone. Can't have it both ways - these are either similar funds or PTTRX is leveraging.
Comments
SPY - SPDR S&P 500 ETF
VTSMX - Vanguard Total Stock Market (all share classes combined, as are the others)
FDRXX - Fidelity Cash Reserves MMF
PTTRX - PIMCO Total Return
VINIX - Vanguard Institutional Index
VFINX - Vanguard 500
AGTHX - American Funds Growth Fund of America
AEGPX - American Funds EuroPacific Growth
VGTSX - Vanguard Total International Stock Index
FCNTX - Fidelity Contrafund
VBMFX - Vanguard Total Bond Market Index
The article says the fund companies are saying that because these are just vanilla funds that don't make extensive use of leverage, they can't be harmful to the financial system in times of stress.
I thought that the use of leverage and other "esoteric" instruments was precisely the difference PIMCO claimed between PTTRX and its ETF non-clone. Can't have it both ways - these are either similar funds or PTTRX is leveraging.
See, e.g. this 2009 Bloomberg article about PTTRX: "Such a portfolio [as quantified by M*] would be akin to a leveraged hedge fund's."
http://www.businessweek.com/magazine/content/09_48/b4157072840757.htm