May 7, 2020
The results are in:
Investors appear to want funds to invest consistent with their name and how the fund is marketed.
Industry wants maximum flexibility notwithstanding what they call and how they market their funds.
It seems odd to me that industry players dont want stricter enforcement of antifraud provisions. They should want investors to have confidence in the fund industry.
On specific points:
ESG should be held to an 80% test. Industry suggests there is lack of standardization. That does not mean there should not be an 80% test. There is not Universally accepted standard for large-cap, but funds make it work.
Tax-free Funds should require a vote to change their 80% policy. Investors select these funds specifically for their tax-free status. They are even willing to accept a lower yield for this. Funds should not be able to change this on a whim.
Index funds should be held to a higher standard. Also indices, if in a fund name, should comply with the same 80% standard.