Mutual Fund Fees Continue to Fall

Passive funds have historically outperformed active funds, and much of this difference is likely driven by the lower fees charged by passive funds. A recent article (Financial News) discusses the impact on both investors and the industry. Moreover, the industry has begun to eliminate questionable fees, such as the 12b-1 fee (see WSJ article here).

David Bowie: Finance Genius?

Famous musician David Bowie just passed away. While most people remember him for his music, he is also famous in the finance area. Bowie was among the first to offer an asset-backed security, which in his case was based on future royalties from his songs. In recognition, this type of asset is often referred to as a "Bowie-bond." See article here, Bloomberg.

Mutual Fund Fees

As we all know, fees impact net returns. For mutual funds, aside from any load, the two primary fees charged are management fees and 12b-1 fees. The management fees are easy to understand. The 12b-1 fees, however, are not. They are designed to cover distribution costs, but this is a broad term. In reality, much of this fee is used to pay brokers/advisors for directing client business to the funds. As a recent article (Investment News) suggests, the SEC may begin to limit such payouts.

China Suspends Circuit Breakers

Circuit breakers are designed to slow down (or even halt) panicked selling. However, Chinese authorities recently suspended their newly implemented circuit breakers, as they seemed to be increasing panic (as opposed to reducing it). See article here, Finance Asia.