Booms, Busts, and Recoveries Message Board

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Strategies & Market Trends : Booms, Busts, and Recoveries

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To: Moominoid who wrote (11046)	11/9/2001 9:51:57 PM
From: Mark Adams	Read Replies (2) of 74559

I think what happens in the US is simple. Investment groups approach small and medium size business proposing to help them set up employee benefit plans (401k and their ilk) for free, but in doing so they provide the fund selections the employees are allowed to choose from. These funds often have a sales load and performance may or may not match leading edge funds where the manager actually works his you know what off trying to get the right choices at the right prices. The fund companies win, as they have a steadily increasing pool of assets under management, which they get a slice of, plus the sales fees if any. A variant of this is the merger, where the purchasing company migrates existing 401k money into 'approved' funds. Quite common in banks, where the approved funds are also those that the bank happens to run through a subsidary. Like I said, I'm pretty cynical when it comes to mutual funds- there are some good ones, but figuring out which 100 out of 6000 takes some work. And the good ones are rarely part of the 401k selection menu.

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