| SEC
Proposes Mutual Fund Ad Rules
By IndexFunds.com Staff
May 15, 2002 |
|
The Securities & Exchange Commission (SEC) is seeking comment
on proposed rules designed to ensure mutual fund advertisements
aren't misleading to investors. The Commission specifically cited
fund ads that touted skyrocketing performance in 1999 and 2000
as examples of marketing efforts that may have established unrealistic
investor expectations.
The SEC wants all fund ads to be accompanied by a disclosure
that past performance isn't necessarily indicative of future results.
In a move likely to be applauded by many fund investor advocates,
the SEC is proposing that ads reveal fund's charges (such as loads)
and expenses. The Commission is also calling for prominent disclosure
of dates quoted in performance ads.
Comments on the proposed rule amendments are due by July 31,
2002. For more information on the proposed rules and how to submit
comments, visit www.sec.gov.
Let's get together . . .
Index providers FTSE and Russell announced Russell indexes will
now use FTSE's Global Classification system to establish sector
data. The partnership allows investors to make apples-to-apples
sector comparisons across the globe using Russell's domestic U.S.
indexes and FTSE's international benchmarks.
"By working with FTSE to align our classification methodologies,
we provide the global investment community with a common standard
to measure their U.S. allocation," said Lori Lori Richards,
manager of Russell indexes.
"Investors who use Russell as their U.S. benchmark can now
compare these holdings with their international portfolios,"
added Jane Staunton, president at FTSE Americas.
In 2001, index providers S&P and MSCI collaborated
on a common Global Industry Classification Standard designed to
facilitate consistent industry comparisons between the two index
families.
The 10 FTSE economic classifications now offered to Russell index
clients are: resources, basic industries, general industries,
cyclical consumer goods, non-cyclical consumer goods, cyclical
services, non-cyclical services, utilities, financials and information
technology.
More information on the FTSE Global Classification Standard can
be found here.
Stat of the day . . .
Despite the rise in popularity of low-cost index funds in the
1990s, the average expense ratio for domestic equity funds continues
to rise.
| Year |
Average
expense ratio |
# of domestic
equity funds |
| 1992 |
1.31% |
980 |
| 1993 |
1.29% |
1,301 |
| 1994 |
1.35% |
1,686 |
| 1995 |
1.39% |
2,114 |
| 1996 |
1.39% |
2,627 |
| 1997 |
1.39% |
3,335 |
| 1998 |
1.42% |
4,181 |
| 1999 |
1.43% |
4,886 |
| 2000 |
1.44% |
5,341 |
| 2001 |
1.47% |
4,739 |
