NASD today unveiled two powerful, easy-to-use online tools designed to help mutual fund investors make smart investment choices.
One will allow investors to determine quickly and easily the expenses associated with a particular mutual fund or exchange traded fund investment. The other will allow investors and brokers to identify available breakpoint discounts for substantial investments in Class A mutual fund shares.
More than 50 million American households hold mutual funds, making mutual funds the investment of choice for the majority of retail investors. For many middle class families, they've become an indispensable tool for meeting future financial needs," said NASD Chairman and CEO Robert Glauber. "It's crucial that investors evaluate the impact of fees and expenses on their mutual fund investments, because those fees and expenses will reduce their returns.
"It's just as important that they take advantage of any available sales charge discounts - known as breakpoints - to maximize their returns," Glauber said. "With NASD's new online tools, getting expense and breakpoint information has never been faster or easier."
NASD's new and improved Mutual Fund Expense Analyzer delivers fee and expense information for virtually all of the more than 18,000 mutual funds and 160 Exchange Traded Funds (ETFs). The new expense analyzer will also estimate and graph a fund's value over time - for any holding period specified by the user, as well as over a 20-year period - providing a running total of expenses the investor would pay during each period.
The tool will compare the expenses of up to three ETFs, mutual funds, or share classes of the same mutual fund simultaneously. Users simply enter a ticker symbol or select a fund, share class or fund family from a drop down menu and the tool automatically displays a screen with expense and fee information.
The new Mutual Fund Expense Analyzer also provides details about the fund or funds selected well beyond fee and expense information. The tool's Fund Details tab shows the Investment Objective, Ticker Symbol, Minimum Purchase Information, Fund Class, Load Structure, Web Site and Phone contact information, and Average Rate of Return Data. The analyzer is also equipped with word search capabilities - allowing users to search for particular funds entering just a partial name, or to use key words such as "international" or "equity" to narrow or target their searches.
This new tool replaces a previous version of the expense analyzer that required users to manually enter sales charges, operating expenses and more, using a prospectus or other disclosure document. The prior version did not offer fund overview information. The new tool is powered by a database maintained by NewRiver, Inc.
NASD's new Mutual Fund Breakpoint Search Tool offers users a groundbreaking way to research eligibility for breakpoint discounts. Investors and brokers can look up breakpoint schedules and linkage rules for mutual funds with front-end sales charges, most commonly A shares. Mutual fund families typically offer sales charge discounts for substantial investments - usually $50,000 or more. The size of the discount typically increases at various "breakpoints" - for instance, at $100,000, $250,000, $500,000 and $1 million. Mutual fund families typically allow a customer to link ownership of different funds in the same mutual fund family to reach a breakpoint amount, and to link purchases of fund shares with shares owned by related persons, such as a spouse or minor child. Fund families often allow a Right of Accumulation (ROA), allowing a customer to combine current mutual fund purchases with previous fund transactions to reach a breakpoint. They also typically allow customers to sign of Letter of Intent (LOI) indicating they will invest an amount qualifying them for a breakpoint discount within a specified period of time.
The Mutual Fund Breakpoint Search Tool allows users to:
- Look up a single fund or fund family, or compare two funds side-by-side - by entering a partial or complete fund name or a ticker symbol.
- View information on a fund's breakpoint schedule - the range of discounts based on purchase size - as well as the availability of other sales charge waivers.
- See whether a fund allows for Rights of Accumulation or Letters of Intent, and whether 529 Plan assets, investments in annuities, unit investment trusts and individual retirement accounts can be used toward the ROA or LOI.
This particular tool was created in response to the recommendations of the Joint NASD/Industry Task Force on Breakpoints, convened by NASD at the request of the Securities and Exchange Commission in 2003, after a regulatory sweep determined that many investors were not receiving breakpoint discounts to which they were entitled. That sweep led to an industry-wide refund program and a number of enforcement actions by NASD and the SEC. Through NASD's efforts to date, more than $130 million has been paid in restitution to investors who did not receive breakpoint discounts. The Mutual Fund Breakpoint Tool supports NASD's mission to protect investors as well as its mission to help securities firms meet their regulatory obligations.
Breakpoint schedule and linkage rule information displayed by the mutual Fund Breakpoint Search Tool is provided by mutual funds to a database maintained by National Securities Clearing Corporation, a subsidiary of the Depository Trust & Clearing Corporation.