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.
THE INVESTOR. Don't invest in the fund if you don't have sound reasoning to do so. If you invest, and you're wrong, you should have nobody to blame but yourself.
Investors invest in funds because of what the funds say they do. If the funds are misrepresenting themselves as M* suggests, then to invert Shakespeare, the fault dear JoJo, is not in ourselves but in our stars (funds).
Do your due diligence and you won't have those problems.
This is such a double standard.
People never complain about funds outperforming when they veer from their stated investment philosophy... They will, however, throw a fit every single time when funds underperform, but are also preforming just as expected in the environment.
Bottom line, if your research is sound, you shouldn't run into the problem. If a fund starts to stray from what you originally intended it to do, then don't own it...
"People never complain about funds outperforming when they veer from their stated investment philosophy."
Since we're talking about legal liability, note that in order to sue for damages, there need to be damages. Seems sort of obvious. So it really doesn't matter whether people complain or not if they haven't suffered monetary damages.
Unfortunately, you're probably right that the courts won't recognize misrepresentation unless huge losses are involved. See, e.g. Morgan Keegan:
[T]he U.S. Securities and Exchange Commission and other regulators [charged] that Morgan Keegan fraudulently misled investors about the risks of several funds. ... The SEC claimed that Morgan Keegan hid the falling value of some funds ...
Not to worry. "Do your due diligence and you won't have those problems." Yup.
Comments
This is such a double standard.
People never complain about funds outperforming when they veer from their stated investment philosophy... They will, however, throw a fit every single time when funds underperform, but are also preforming just as expected in the environment.
Bottom line, if your research is sound, you shouldn't run into the problem. If a fund starts to stray from what you originally intended it to do, then don't own it...
Since we're talking about legal liability, note that in order to sue for damages, there need to be damages. Seems sort of obvious. So it really doesn't matter whether people complain or not if they haven't suffered monetary damages.
Unfortunately, you're probably right that the courts won't recognize misrepresentation unless huge losses are involved. See, e.g. Morgan Keegan:
http://www.zimmreed.com/case/morgan-keegan-lawsuit/
http://www.reuters.com/article/regionsfinancial-settlement-mutualfunds-idUSL1N0V211420150123
From the Reuter's article: Not to worry. "Do your due diligence and you won't have those problems." Yup.