Podcast for 10/30/07: Interview with Dr. Daniel Bergstresser

Subscribe:

Kim interviews Dr. Daniel Bergstresser of the Harvard Business School about the costs and benefits of brokers in the mutual fund industry.

MP3 Download: Hi (128k) | Lo (24k)

Length: 13:05

Notes:
1:00  Daniel Bergstresser gives an overview of the study.
2:19  He says they found that funds sold through the broker channel, even before you subtract the distribution fees, perform worse than funds sold through the direct channel. (This applied to domestic equity funds)
3:00  He says the findings surprised them.
3:50 The five questions Dr. Bergstresser and his colleagues attempted to answer.
4:26  Some of the hypotheses they tested on where brokers create value for their customers. In the aggregate, he says, it doesn't look like brokers are delivering tangible benefits.
6:36  They looked at whether brokers corrected bad behavior, such as chasing returns. They didn't.
8:40  Load structures (commissions) and their bearing on which funds investors choose.
10:39  If you're looking for the benefits created by brokers, you need to look along less tangible dimensions than the ones Dr. Bergstresser and his peers studied.

Resources:

Assessing the Costs and Benefits of Brokers in the Mutual Fund Industry

 

Kim Snider, Kim Snider Financial Communications, Chronim Investments and/or Snider Advisors make no representation that the information and opinions expressed are accurate, complete or current. The opinions expressed should not be construed as financial, legal, tax, or other advice and are provided for informational purposes only. Call 866-952-0100 to request the Snider Investment Method™ Owner's Manual, which includes a description of the Snider Investment Method, investment objectives, risks, suitability and other information. Please read and consider carefully before investing. All investments are subject to risk including possible loss of principal.