The Securities & Exchange Commission is looking for investor input on its new ideas for improving mutual fund disclosures.

According to the SEC, the purpose of the new proposals is to supply investors “with concise data about mutual funds that is easier to use than the mutual fund prospectuses available nowadays.” The proposal includes a requirement of a summary section in every prospectus that would include investment objectives, costs, principal investment strategies, risks and performance, top ten portfolio holdings, a list of investment advisers and portfolio managers, brief purchase, sale, and tax knowledge, and info about broker compensation and conflicts.

A model prospectus summary on the SEC website is a great improvement by the current system which requires investors to leaf through mountains of boilerplate to find key info about their funds.

According to an

scoop in the latest issue of SmartMoney (not available online), the industry is supportive of the degree as it will save it about $182 million in printing and mailing costs! But the industry is resistant to further suggestions that the new model for prospectuses should plus include additional comparative goods on fees and performance. It’s a shame that the industry is opposed to giving investors more data; good funds would probably want to supply investors with that kind of notes.

But the streamlined prospectus is a great improvement and hopefully it will come to fruition soon. Only about 10% of investors read prospectuses before investing in funds, and that number ought to be 100%.

Original post by Zac Bissonnette

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