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  • Mark December 2016
  • MJG December 2016
  • msf December 2016
Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.

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Chuck Jaffe: This Radical Twist To Your Mutual Fund Could Make You A Better Investor

FYI: Mutual fund companies have long wanted you to make their lives easier and for you to reduce their costs by receiving all documents electronically.

In the spirit of the holiday season, it’s time to give the fund companies what they want — but only if they give us something we deserve as shareholders, namely accessible, understandable information about funds in a format individuals want.
Regards,
Ted
http://www.marketwatch.com/story/this-radical-change-to-your-mutual-fund-could-make-you-a-better-investor-2016-12-02/print

Comments

  • Hi Guys,

    There are elements in this Jaffe article that I agree with, and others that I take exception. I agree that personalized perspectives would be more completely read but are likely never to be developed, at least in my lifetime. I disagree that even a personalized perspective would make me a better investor. Even if it is not in a perspective, I always seek and find the info I need to make an investment decision. Lacking such info, I simply pass with or without a perspective. No harm, no foul.

    Today's perspectives are far too long and complex. They invite shortcuts. The Lord's Prayer is said in 67 words; the Gettyburg Address was completed in just 279 words. Brevity is always admired. I mostly fail in that admirable goal.

    I suppose that failure can be somewhat related to the page limits that the government often imposed when responding to an RFP (request for proposal) during my working days. In our zeal to win the contract, we wanted to demonstrate our expertise by overloading any reviewer with a ton of data and analyses. Our solution was to use small print, eliminate margins, and deploy pages with multiple foldouts. In all likelihood those tactics reduced our winning odds.

    I look forward to Jaffe's followup article in which he promises to identify his fund selection criteria. I anticipate that it will be similar to mine and probably similar to yours. We're not all that much different although our weighting factors on each criterion are likely to be miles apart.

    Best Wishes.
  • Name a fund company, any fund company for that matter, that would lower expenses if all or the vast majority of their customers opted for electronic delivery of their relevant material.
  • msf
    edited December 2016
    Jaffe seems to be setting up a straw man again. He talks about 40+ page index fund prospectuses as though fund companies were required to send these to investors (whether via paper mail or, if the investor elects, electronically). False.
    Rule 498 provides that if a fund elects to rely on a summary prospectus to meet its 1933 Act prospectus delivery obligations, the fund’s current summary prospectus, SAI, and most recent annual and semi-annual reports to shareholders may be accessible, free of charge, at an Internet website address specified in the summary prospectus.
    http://www.pli.edu/public/booksamples/5519_sample4.pdf

    VFINX 8 page summary prospectus: https://personal.vanguard.com/pub/Pdf/sp40.pdf?2210120533

    What he's calling "personalized" is merely configurable. He's not suggesting incorporating any personal information, like how much your investment is costing you in dollars, which would be personal to you. He's just suggesting that you be able to order your prospectus with an orange cover instead of a blue one; with the expense table in front and the investment strategies behind that instead of vice versa; and so on.

    Just because it can be done dosn't make it beneficial. Which would you find more helpful on a credit card disclosure - a fixed boilerplate table where you could compare features side by side, line by line, in standardized form with standardized terminology, or ones where things were rearranged and perhaps didn't line up for various reasons (including the possibility that not all issuers offered the same configuration options)?

    Brevity? I prefer that things be as simple as possible but not simplistic.
    http://quoteinvestigator.com/2011/05/13/einstein-simple/

    A few years ago, I had an email exchange with Jaffe, where I pointed out an error (or misleading sentence, I forget). His response was that he had just so many column inches to work with.

    Name a company that would reduce its fees (I assume that's what Mark meant by expenses) if its costs went down? Vanguard.
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