mutual fund timers

17:30 Jun 24, 2008 

¡Gracias, Desertfox!

15:44 Jun 24, 2008 

Some "money talk" from Wikipedia.

15:44 Jun 24, 2008 

"Market timing"
Spitzer and later the SEC also charged that major mutual fund groups such as Janus, Bank One's One Group, and Strong Capital and others facilitated market timing trading for favored clients. Market timing is an investment strategy in which an investor tries to profit from short-term market cycles by trading into and out of market sectors as they heat up and cool off. In a novel interpretation of New York's Martin Act, Spitzer contended that fund firms committed fraud when they allowed some clients to trade more frequently than allowed in their fund documents and prospectus. In many cases, funds bar or limit market timing because the practice may increase the cost of administering a mutual fund borne by all shareholders in the fund. Market timers also can make managing the fund more difficult since the fund may need to keep extra cash to meet liquidity demands of selling timers, although if timers are trading opposite glows of other investors, they can moderate cash fluctuations. Those funds that did not limit market timing in their prospectus -- as well as a small number of funds that cater specifically to market timers -- were not charged. Spitzer contended that some advisors allowed market timers in order to increase their assets under management (fund advisors are paid based on the amount of assets in the fund).