A New Department of Labor Proposal on Index Funds
Wednesday, March 31st, 2010Kevin S. Price submits:
We ran across an interesting piece in InvestmentNews on a recent DOL trial balloon concerning passive and active funds in ERISA plans. Here’s the essence of the DOL proposal:
Specifically, financial advisers point to a recent proposal in which the Labor Department asked whether computer-based advice models should take into account only the fees and expenses of a mutual fund–and not its historical returns–since they aren’t guaranteed. If fees and expenses are the primary factor when recommending funds for 401(k) plans, these advisers contend, index funds will win out over actively managed funds every time.
