What is CMFI? We are a shareholder advocacy organization dedicated to promoting the interests, needs, and concerns of individual mutual fund investors. Learn more
CMFI wrote to the SEC Investor Advisory Committee on August 18, 2016, expressing support for the Committee's recent recommendation that the SEC explore ways to improve mutual fund cost disclosures.
Here is a link to the Investor Advisory Committee's recommendation of April 14, 2016: https://www.sec.gov/spotlight/investor-advisory-committee-2012/iac-041416-recommendation-investor-as-purchaser.pdf
In its letter, CMFI discussed two specific recommendations for both the Committee and the SEC to improve the disclosure of fund costs to individual investors:
First, CMFI supports the concept advocated by the Committee that the SEC consider requiring the disclosure of individualized dollar costs on annual shareholder statements. If this cost is disclosed and explained as an estimate only, then it can be done very simply and in an inexpensive manner on annual statements.
Second, CMFI supports the Committee's recommendation that the SEC consider additional disclosure changes to improve investors' understanding of fund costs. Since brokerage commissions and other portfolio transaction costs are the largest expense to investors that is not reflected in the expense ratio, CMFI supports more transparent and standardized disclosure of these costs. The SEC could immediately enhance investor understanding of transaction costs by simply standardizing the disclosure of actual brokerage commissions that are paid each year and disclosed in the Statement of Additional Information. This amount can be converted into a standardized transaction cost ratio by taking the total of annual brokerage commissions and dividing it by the average net assets of a fund over the same period.
Click the following link to review this CMFI letter to the SEC Investor Advisory Committee: