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DFA Tops With Advisers, But American Funds Stirring
Yes, indeed; related in part, to boomers retiring and rolling 401k, 403b's and related. I know of two folks just by chance. These folks need and want someone else to advise and place the investments. So, not necessarily related to commissions; but the fact that some folks are moving to advisors, in my opinion.
In fact, DFA doesn't pay commissions: "Shares of Dimensional's funds are generally available only to institutional investors and clients of select independent advisors. Such advisors do not receive compensation from Dimensional or its funds." (From DFA site, under http://www.dfaus.com/find_advisor/ Emphasis added.)
The article Ted linked to said what American Funds is doing (nothing to do with loads or commissions): adding separately managed accounts (SMAs), "bolstering the wholesale team", making investment management changes, 401k changes, broadening its record-keeping service.
Now we can ignore the last one if we're talking about American Funds AUM - since what they're doing with the record-keeping services is in a sense acting as a broker for multiple fund families. Adding more outside funds (i.e. more choices in general) makes the service more attractive, increases the company revenue (for its services, not its funds), and might incidentally pull in more money to their house funds as well as the outside funds, but that's really a secondary effect.
My take - American Funds is finally recognizing what Fidelity (and others) recognized two decades ago. That the money to be made is in pension plans (both traditional, i.e. defined benefit, and modern, i.e. 401k, etc. defined contribution). Fidelity reacted by reigning in its gunslingers, pureeing their funds, and shooting (rather successfully) for mediocrity. Just compare how well Bob Stansky ran Growth fund before leading Magellan on its downward path.
American Funds can be more successful at this (IMHO), because its culture is different - it always aimed at good, not great, performance, with team management, not stars. But it hadn't been paying attention to its institutional (pension) offerings - as the article notes, its 3 &10 year average performance ratings were 34th/38th percentile for retail funds, but only 57th/52nd for its institutional offerings.
It has changed this by integrating its institutional and retail offerings - so one has better management and broader offerings now on the institutional side.
It has done something similar with its comingled funds (aka collective investment trusts). Comingled funds are all those "no ticker, no prospectus" funds you find in 401K plans. They're like mutual funds (often clones), but regulated differently (read: cheaper and less disclosure). As you might infer, they're also big in pension plans (DB and DC).
One hopes American doesn't run into the same problem Fidelity has - spreading manages too finely (not enough good managers for all the responsibilities assigned). I continue to regard American Funds as a load family analogue of Vanguard - conservative, multi-manager/team oriented, low cost (certainly not as low as Vanguard, but an inexpensive load family), methodical in its reaction to trends, and interested in consistent performance.
Comments
So, not necessarily related to commissions; but the fact that some folks are moving to advisors, in my opinion.
In fact, DFA doesn't pay commissions: "Shares of Dimensional's funds are generally available only to institutional investors and clients of select independent advisors. Such advisors do not receive compensation from Dimensional or its funds." (From DFA site, under http://www.dfaus.com/find_advisor/ Emphasis added.)
The article Ted linked to said what American Funds is doing (nothing to do with loads or commissions): adding separately managed accounts (SMAs), "bolstering the wholesale team", making investment management changes, 401k changes, broadening its record-keeping service.
Now we can ignore the last one if we're talking about American Funds AUM - since what they're doing with the record-keeping services is in a sense acting as a broker for multiple fund families. Adding more outside funds (i.e. more choices in general) makes the service more attractive, increases the company revenue (for its services, not its funds), and might incidentally pull in more money to their house funds as well as the outside funds, but that's really a secondary effect.
As to the other changes, here's an article that goes into more detail about what these changes are:
http://www.pionline.com/article/20130318/PRINTSUB/303189982
My take - American Funds is finally recognizing what Fidelity (and others) recognized two decades ago. That the money to be made is in pension plans (both traditional, i.e. defined benefit, and modern, i.e. 401k, etc. defined contribution). Fidelity reacted by reigning in its gunslingers, pureeing their funds, and shooting (rather successfully) for mediocrity. Just compare how well Bob Stansky ran Growth fund before leading Magellan on its downward path.
American Funds can be more successful at this (IMHO), because its culture is different - it always aimed at good, not great, performance, with team management, not stars. But it hadn't been paying attention to its institutional (pension) offerings - as the article notes, its 3 &10 year average performance ratings were 34th/38th percentile for retail funds, but only 57th/52nd for its institutional offerings.
It has changed this by integrating its institutional and retail offerings - so one has better management and broader offerings now on the institutional side.
It has done something similar with its comingled funds (aka collective investment trusts). Comingled funds are all those "no ticker, no prospectus" funds you find in 401K plans. They're like mutual funds (often clones), but regulated differently (read: cheaper and less disclosure). As you might infer, they're also big in pension plans (DB and DC).
One hopes American doesn't run into the same problem Fidelity has - spreading manages too finely (not enough good managers for all the responsibilities assigned). I continue to regard American Funds as a load family analogue of Vanguard - conservative, multi-manager/team oriented, low cost (certainly not as low as Vanguard, but an inexpensive load family), methodical in its reaction to trends, and interested in consistent performance.