Tough times for everyone but looks like it is beginning to get particularly challenging for those overcharging, under performing funds. It was always bound to come, but given the recession investors are talking with their feet and the incumbents are beginning to find life difficult.
Two recent stories only go to highlight the challenges faced by the industry. Bloomberg is reporting huge job losses in Hedge funds and that a staggering 70% lost money in 2008:
About 920 hedge funds, or 12 percent, closed last year, according to data compiled by Chicago-based Hedge Fund Research Inc. Of the 6,800 single-manager funds that remain, 70 percent lost money in 2008, meaning they can’t resume collecting performance fees until the losses are recouped. Those fees, generally 20 percent of investment profits, are the primary source of cash used to pay bonuses.
In even more telling news the Supreme court has agreed to hear a case that will determine whether investors can blame a fund's advisers for excessive charges:
At its heart, the case speaks to the way fees are set across the mutual fund industry, and, depending on the court’s decision, could radically change how much shareholders pay in the future. “Millions of people invest in mutual funds,” said William Birdthistle, a professor of securities law at Illinois Institute of Technology's Chicago-Kent College of Law. “This touches everyone.”
Covestor was established to bring transparency to the fund management industry, to enable ordinary investors to challenge the incumbents. That is becoming more of a reality daily and it is great to have you on the journey.




