THE DIRTY LITTLE SECRET OF MUTUAL FUNDS

摘要

When money manager Phillip Toews launched a new mutual fund last July, he thought he would have no trouble finding investors. Given the stock market's volatility, he figured his Toews Nasdaq-100 Hedged Index Fund would be a surefire hit. Yet two brokerage houses refused to let Toews contact their brokers about selling the fund. Why? He wasn't willing to pay to be on the firms' preferred list of funds. Such "pay-to-play" arrangements are a dirty little secret of the mutual-fund industry. True, all fund companies pay to get a selling agreement with a national broker―and that can cost $300,000 or so. But that money doesn't get a fund any attention―in other words, a place on the preferred list. Toews does have selling agreements with 30 different brokers, primarily regional ones where the initial set-up fees are small. Even so, because he's not on any preferred lists, the likelihood of investors hearing about his fund from brokers is slim.