CHURNING THE POT OF MONEY
IS CALLED MARKET TIMING
CAN GUIDE INVESTMENT TRADERS
TO AVOID GREED AND SIN
AS PER DHARm.....
Globe and Mail :
Rapid trading in mutual funds is highly profitable for professional traders.
And while it isn't illegal, fund managers have a fiduciary duty to investors to
ensure that the fund is run with their best interests at heart. Rapid trading is
clearly not in the best interests of long-term investors because it reduces a
fund's returns......and investors have no way of knowing
whether their mutual funds contain telltale signs of market timing
activity.....very serious fault in a government
PVAF continues to share the knowledge of mutual funds trading from a Globe
and Mail serial on mutual funds trading practices so that YOU can protect and
prosper with this knowledge and the knowledge from
veD of objectives of life called
puruSHaaARth in sNskRUt language
and in veD which is
SCIENCES OF CREATION AND LIFE......the
knowledge contain in veD is an life
operation manual for living human life with purpose, goals and objectives based
on the rules, regulations and laws of DHARm....DHARm
is the operating system in which the entire creation including humans have to
take birth, grow, work to sustain and continue the life travels from one life to
another in sNsaar meaning cycles of life and death....... ......
Please click on the next line to continue to read the first paragraph above
from the 3rd of the serial in Canadian
Globe and Mail on mutual fund practices of
your traders or you can read the article on the Globe and Mail web site by
clicking on the preceding red hilite.....
Spotting signs of market
tough for the ordinary investor
By KAREN HOWLETT
Globe and Mail: Monday, June 21, 2004 -
Investors have no way of knowing whether their mutual funds contain telltale
signs of market timing activity.
A mutual fund's annual report contains such information as average assets for
the years as well as sales and redemption figures. But that is only part of the
Report on Business used monthly breakdowns of sales, redemptions and transfers
in and out of a fund within the same family. Fund companies provide these
figures to the Investment Funds Institute of Canada (IFIC), the industry trade
IFIC compiles these statistics into a lengthy, monthly statistical package
titled Details By Fund Type Report. At one time, IFIC made these reports
available to the public by publishing them on its website.
But as of April, 2001, IFIC has restricted access to these reports to mutual
fund companies and other IFIC members. For everyone else, IFIC charges $1,000
for a year's worth of data. (Report on Business obtained the reports for April,
2001, through to December, 2003, from industry sources.)
John Murray, head of research at IFIC, said its board of directors decided to
start charging for the report as part of a recruitment drive. They wanted to
encourage fund companies that were using its services but were not members to
join IFIC, he said.
In the process, the public lost access to a rich source of timely data that
reveal what's behind a mutual fund's churn rate -- a measure of sales,
redemptions and transfers relative to average assets.
IFIC now publishes bare-bones information every month, including a ranking of
fund companies, measured by assets under management, and total assets, sales and
redemptions for the industry.
Investors can get more information on their fund by wading through its annual
report. There, using such data as the table of change in net assets, they can
find enough information to calculate an annual churn rate.
But the annual reports do not disclose enough information to allow an investor
to differentiate one fund with a high churn rate from another.
The IFIC data used by Report on Business revealed that many fund companies with
high churn rates had patterns of monthly transfers in and out that were roughly
In the annual reports, transfers are lumped in with sales and redemptions, so
there is no way of seeing how much cash flows in and out of funds within the
same family. There is also no monthly breakdown of activity.
Two examples illustrate the point. In the Ethical International Equity Fund last
year, cash flows in and out were six times average assets of $3-million, for a
churn rate of 606 per cent.
At first glance, the rate appears high. But the fund was excluded from the group
singled out by Report on Business because further scrutiny revealed that nearly
all of that activity came from sales, which totalled $17.2-million.
Figures for the Templeton Growth Fund, the second-largest mutual fund in Canada,
told a different story. Cash flows totalled $11.5-billion in 2002, roughly 1.5
times average assets of $6.4-billion, for a churn rate of 142 per cent. It made
the list because sales were only $380-million, while much of the action was from
transfers in ($4.9-billion) and transfers out ($5.1-billion).