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Closed-End Funds
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OT-WSJ Article on Transparent Mutual FundsI think the mutual fund cef trackers don't seem to have this problem since there cash flows into & out of their funds seem to be minimal but they both have been disclosing their ports on a monthly basis which is a nice feature. BTW Riv initially intended to provide frequent port updates but subsequently decided not to do so. Their lack of timely disclosure though has not seemed to have helped since its mp has persistently under performed everyone else. >The Downside of Knowing a Lot About Your Mutual Fund A George Mason professor says more mutual-fund disclosure may be a case of too much information Investors in funds that disclose information less frequently don’t tend to move in and out of positions as much. PHOTO: NICOLAS ORTEGA By Derek Horstmeyer Aug. 4, 2019 10:13 pm ET Often investors assume that more is better when it comes to disclosure of the portfolios and trading activity of the mutual funds they hold. Transparency, they believe, can only help them in making investment decisions that can maximize their personal returns. But it seems there can be too much transparency. Investors in funds that disclose most frequently suffer the biggest gap between the funds’ returns and their own, because of the investors’ excess trading of fund shares and tendency to buy high and sell low. Investors in funds that disclose less frequently, on the other hand, don’t tend to move in and out of positions as much. Nor do they try to time the market to nearly the same degree, and so overall do less damage to their portfolio through poor trading. Losing out The difference is apparent in what is known as the return gap. This measure compares a fund’s return with the return for an average investor in the fund. Because investors tend to pull their money out at the bottom of the market in times of panic (when they should actually be buying cheap equities) and pile more money into the market at the top in times of exuberance (when if anything they should be paring their holdings to maintain their asset allocations), the average investor’s return normally is lower than the fund’s return. For investors who hold U.S.-stock mutual funds that disclose their data monthly, the median return gap over the past five years was 0.95 percentage point a year, according to data from research firm Morningstar Inc. That means most investors in such funds lost 0.95 point or more in returns a year by timing the market inefficiently and trading excessively in the funds’ shares.< |
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