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What’s The Matter with U: “U” is absent in the current offering of 375 Mutual Fund Share Class names

Personally, I don’t like going to a restaurant where the menu just goes on and on, making me wonder if they can really prepare all those selections equally well! I also have a problem with mutual fund share classes, on a number of levels.  Like certain restaurant menus, they are endless.

I recently looked at a common mutual fund industry database and found over 375 share class names. Back in the old days you had A, B and C shares. Today you’ve got share classes named after every letter in the alphabet, except the letter U. The letter R appears to be very popular, like appetizers; you can have an R, R1, R2, R3, R4, R5 or R6 share class. Looking for a main course? The names include some nice descriptive examples such as Ultra, Select, Retail, Prime, Premier, Direct, Classic, VIP and hundreds more. I am left to ponder, is U like monkey brains: something found in movies, but not on real menus? And why do we need all these names in the first place?

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BREAKING NEWS: Implications of the SEC’s just released Mutual Fund Guidance

The long awaited result of the SEC’s distribution in guise sweeps hit today; you can find the link here.  Many of the points covered were expected, and most of the requirements for compliance identified are currently supported by the Oversight platform Delta Data actually developed in anticipation of this guidance. Here is the overarching theme in this news: the 12b1 plan represents the only funds that can be used for distribution expense, and anything that promotes sales in any way, whether direct or indirect, must be allocated as an expense to the advisor and/or other relevant service providers, not the fund. Fees related to distribution in excess of the 12b1 plan must be allocated to the advisor and/or other relevant service providers.

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Meeting the Needs of an Industry via Innovative Software Products: Mandates versus Evolution – Part 2

This is the second part of a two part posts concerning risks associated with developing new software products under two different scenarios: mandates and evolution. In the first part we discussed developing products due to mandates; in this second part we’ll explore developing products due to industry evolution. This discussion will be supported with examples of actual Delta Data Software products. Read more

Meeting the Needs of an Industry via Innovative Software Products: Mandates versus Evolution – Part 1

Much to her chagrin, I have told my wife many times that operating a software products company is like being a riverboat gambler. It is exciting, risky, and involves timing, industry savvy and a good relationship with Lady Luck (she hates it when I mention other women!) As a software product company focused 100% on the mutual fund and pooled products industry, Delta Data will generally see software development opportunities emerge in two distinct ways. First, there are the opportunities that present themselves as a result of mandated legislation. Then there are the opportunities that are discovered through an evolution within the industry itself. Each of the two opportunities has its pros and cons. To be successful, software companies need to recognize these opportunities and bring innovative products to the market faster and better than the bigger fish in the pond. Of course this innovation involves risk, hence the relationship with gambling. Read more

401(k) Plans With Employer Stock – A Vanishing Breed

In my last blog article, I talked about how retirement plans had evolved from employer sponsored and employer run profit sharing plans into outsourced participant directed 401(k) plans. One of the big differences between the old profit sharing plans and today’s 401(k) plan that I did not get to mention in the last article is the use of employer stock in the retirement plan. Read more

Watching the Pendulum Swing on 401(k) Plan Expenses

There have been several articles in the news recently about how mutual fund expense ratios are continuing to drop for 401(k) plan participants. These were based on a report issued by the Investment Company Institute in August 2015 called Read more

SEC “Distribution in Guise” Sweep

There has been a lot of news recently about the SEC sweeps where they are looking at fund companies that may be paying out distribution fees but disguising them as servicing fees. With all that the SEC has on their plate, you may be asking yourself, “why is this so important to them”? Well, the SEC Read more

The Motivations behind the SEC “Distribution in Guise” Sweeps

The biggest and most vexing news concerning mutual funds this year involves a three letter acronym: SEC, followed by a three letter word: why? The SEC has been conducting deep drill down sweeps into the practice of fund companies paying out distribution fees disguised as service fees. The question floating around the industry is: why has this become important to the SEC now? Well, to understand the present involves looking at the past, and that requires a review of the SEC’s Rule 12b-1

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