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 compromise and the obvious solution goes back to what we learned in grade school: If funds exercise the option to disclose their holdings more often than required, they should be required to give that extra information candy to everyone, or to no one at all.
Sad. But I don't doubt the veracity of our big brother society - having recently been forced to undergo a TSA finger print screening while preparing to board a plane at a major U.S. airport. Yikes - Big eyes everywhere. And, in this case those big snoopy eyes are skimming off fund profits that should go equitably to all shareholders.
What to do? 1) Lobby for better safeguards, 2) Rely more on index funds, 3) Purchase your own equities, bonds, gold bullion etc. (kinda defeats our purpose here at MFO), 4) Gravitate more to those managers with long term buy and hold philosophies. The less trading in and out of holdings the fund engages in, the less susceptible it should be to these efforts to skim off profits. (Dodge and Cox is one such fund manager), 5) Learn to love and invest in lower profile "Steady-Eddy" funds which don't attract as much hot money moving in and out as do the high flyers who often soar and swoon on minor market developments. This is one reason, I think, why PRWCX has been so successful - it isn't a very lucrative target for short-term opportunists. Max Funds does an interesting analysis using a "Hot Money Index" in attempting to rank funds on susceptibility to these big momentum moves which can harm small stay-put investors. And this all ties in to some of the recent prohibitions by T. Rowe Price and other fund companies against group trading (often by union members or subscribers to newsletters) who attempt to gain an advantage within a fund by, essentially, trading the fund in-mass - likely based upon the types of data mining and computer generated buy-sell recommendations referenced in the article.
I promised myself I wouldn't keep signing on late at night saying stupid things, but I was going into withdrawal
The genie is out of the big data bottle and I have little faith in consumer protection lobbying unless we all pay up to be protected (you probably thought that's what some of your taxes were for, but you/we're not paying congressmen enough to be honest, apparently, or at least not enough to get re-elected), so 1) fails. I like 2), 4) & 5). 3) requires either a lot of work or enough money to buy enough equities to spread the risk and the trading costs, even at $20 a round trip, require around $100K before you approach some of the index funds' costs now.
It was sad to see the pilots abusing TRP, and I applauded TRP's response, but they seemed a bit wishy-washy, as I vaguely recall. Had they more courage, they would have simply closed out the pilots' accounts, accepted their loss of fees, and reassured their other shareholders. The pilots are smart guys with too much down-time.
Comments
What to do? 1) Lobby for better safeguards, 2) Rely more on index funds, 3) Purchase your own equities, bonds, gold bullion etc. (kinda defeats our purpose here at MFO), 4) Gravitate more to those managers with long term buy and hold philosophies. The less trading in and out of holdings the fund engages in, the less susceptible it should be to these efforts to skim off profits. (Dodge and Cox is one such fund manager), 5) Learn to love and invest in lower profile "Steady-Eddy" funds which don't attract as much hot money moving in and out as do the high flyers who often soar and swoon on minor market developments. This is one reason, I think, why PRWCX has been so successful - it isn't a very lucrative target for short-term opportunists. Max Funds does an interesting analysis using a "Hot Money Index" in attempting to rank funds on susceptibility to these big momentum moves which can harm small stay-put investors. And this all ties in to some of the recent prohibitions by T. Rowe Price and other fund companies against group trading (often by union members or subscribers to newsletters) who attempt to gain an advantage within a fund by, essentially, trading the fund in-mass - likely based upon the types of data mining and computer generated buy-sell recommendations referenced in the article.
I promised myself I wouldn't keep signing on late at night saying stupid things, but I was going into withdrawal
The genie is out of the big data bottle and I have little faith in consumer protection lobbying unless we all pay up to be protected (you probably thought that's what some of your taxes were for, but you/we're not paying congressmen enough to be honest, apparently, or at least not enough to get re-elected), so 1) fails. I like 2), 4) & 5). 3) requires either a lot of work or enough money to buy enough equities to spread the risk and the trading costs, even at $20 a round trip, require around $100K before you approach some of the index funds' costs now.
It was sad to see the pilots abusing TRP, and I applauded TRP's response, but they seemed a bit wishy-washy, as I vaguely recall. Had they more courage, they would have simply closed out the pilots' accounts, accepted their loss of fees, and reassured their other shareholders. The pilots are smart guys with too much down-time.